Stocks tilt up on progress of virus vaccine
Stocks around the world whipped higher Wednesday, riding a wave of optimism on encouraging data about a possible treatment for COVID-19.
The upswell of hope was so strong that investors completely sidestepped a report showing the outbreak drove the U.S. economy to its worst quarterly performance since the Great Recession. The S&P 500 vaulted 2.7 percent higher and extended a rally that’s brought the U.S. stock market to the brink of its best month in 45 years.
The spark for Wednesday’s rally was a report that an experimental drug proved effective against the new coronavirus in a study run by the National Institutes of Health. The nation’s top infectious diseases expert said the drug reduced the time it takes patients to recover, and it raised hopes that life around the world may eventually tiptoe back toward “normal.”
The S&P 500 rose 76.12 points to 2,939.51. It has surged 13.7 percent in April, and it’s a day away from closing out its best month since late 1974.
The Dow Jones Industrial Average rose 532.31, or 2.2 percent, to 24,633.86, and the Nasdaq climbed 306.98, or 3.6 percent, to 8,914.71.
“What you’re finding now is you have this debate between optimism and realism,” said Adam Taback, chief investment officer for Wells Fargo Private Wealth Management.
The Federal Reserve said Wednesday that it expects the health crisis to weigh on the economy “over the medium term,” as it promised to keep in place massive amounts of aid and interest rates at nearly zero.
“Everything except equities is telling you things are not great,” Taback said. “This market is overly optimistic.”
Gilead’s release about its remdesivir drug hit markets at the same moment as a government report showing the U.S. economy shrank at a 4.8 percent annual rate in the first three months of the year.
Job losses have exploded since early April, as layoffs sweep the nation following widespread stay-at-home orders, and economists expect to see even worse numbers for the second quarter of the year.
The market’s gains Wednesday were widespread and accelerated through the day. Big tech and communications stocks helped lead the way.
Oil prices are continuing their extreme swings after a collapse in demand has sent crude storage tanks close to their limits. Benchmark U.S. crude oil for June delivery rose $2.72, or 22 percent, to settle at $15.06 a barrel Wednesday. Brent crude oil, the international standard, rose $2.08, or 10.2 percent, to $22.54 a barrel.