US Stocks surge on signs of progress in coronavirus treatment

The US equity market finished session sharply higher on Wednesday, 29 April 2020, as investors risk sentiments bolstered after news of positive trial results for a Gilead Sciences antiviral drug remdesvir used in treating the new coronavirus as well as on comments from Chairman Powell that the Federal Reserve will use its powers to the absolute limit to offset the coronavirus-induced downturn on economic activity, employment and inflation in the near term. At closing bell, the Dow Jones Industrial Average surged 532.31 points, or 2.2%, to 24,633.86. The S&P 500 - a gauge of US retirement and education savings accounts - spurted 76.12 points, or 2.7%, to 2,939.51. The tech-heavy Nasdaq Composite Index zoomed up 306.98 points, or 3.6%, to 8,914.71.

Wall Street stocks opened higher amid reaction to developments regarding the use of Gilead Sciences' antiviral drug remdesivir as a potential new treatment for Covid-19 patients. Gilead Sciences said on Wednesday that preliminary results of a coronavirus drug trial showed at least 50% of patients treated with a five-day dosage of remdesivir improved and more than half were discharged from the hospital within two weeks. Later Wednesday, White House health advisor Dr. Anthony Fauci said NIAID's remdesivir drug trial, which enrolled about 800 patients, showed quite good news and that the drug would set a new standard of care for Covid-19 patients.

Globally, the coronavirus pandemic has infected more than 3.1 million and taken at least 226,771 lives, according to data compiled by John Hopkins University.

The US Federal Reserve said it would continue with its aggressive policy stance until it is comfortable that the economy is back on its feet. The Fed held its interest rate target between 0% and 0.25%. The Federal Open Market Committee said in its post-meeting statement that the ongoing public health crisis "will weigh heavily on economic activity, employment, and inflation in the near term," and pose considerable risks to the economic outlook over the medium term.

Noting bleak conditions across multiple sectors of the economy, the Fed said, "The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world," the post-meeting statement said. In his post-meet press conference, Fed Chair Jerome Powell said "Medium term risks means over next year or so, primarily length of time to control virus. The risks also involve potential damage to economy, workers, if levels of unemployment remain high for an extended time." "Damage could also be done if small businesses are harmed by unnecessary insolvencies," he said. Powell also said that global dimension also poses risks that could weigh on US performance over time and said economic activity will start to pick up as reopening begins but will take some time to get back to more normal levels of unemployment.

Shares of Gilead Sciences Inc surged after drugmaker announced that its drug remdesivir is showing promise as an effective COVID-19 treatment.

ECONMIC NEWS: US GDP Contracts 4.8% In First Quarter Of 2020- US real gross domestic product decreased at an annual rate of 4.8% in the first quarter following the 2.1% jump in the fourth quarter of 2019, according to a report released by the Commerce Department on Wednesday. The decrease in real GDP in the first quarter reflected negative contributions from consumer spending, non-residential fixed investment, exports, and private inventory investment. Meanwhile, positive contributions from residential fixed investment, federal government spending, and state and local government spending helped limit the downside. Consumer spending plunged by 7.6% in the first quarter amid a steep drop in spending on services, led by health care, and goods, led by motor vehicles and parts.

US Pending Home Sales Plunge In March- US pending home sales index plunged by 20.8% to 88.2 in March after jumping by 2.3% to 111.4 in February, a report released by National Association of Realtors on Wednesday. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The bigger than expected slump in pending home sales came as each of the four major regions saw drops in month-over-month contract activity and year-over-year pending home sales transactions.

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