After selling off in the extended trading session on Thursday, equity benchmarks rallied back to essentially unchanged to slightly positive levels on Friday as stocks are likely headed for their first weekly decline in three amid historic volatility in the crude oil market.
On the week, however, the Dow has dropped 3.3% while the S&P 500 has fallen over 2%, and the Nasdaq has shed 1.8%.
Index ETFs that follow the stock indices are tracking their models Friday as well. The Invesco QQQ Trust (NASDAQ: QQQ) has rallied 0.47%, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) is flat on the day, and the SPDR S&P 500 ETF (NYSEArca: SPY) has climbed 0.33% as of almost 1 pm EST.
U.S. crude futures have climbed about 3%, to trade at $16.90 per barrel, amid optimism that the U.S. will cut some of its production in consideration of the still shrinking demand and a dearth of storage capacity. Despite the midweek rally, however, like stocks, oil is still off for the week, with West Texas Intermediate futures down over 30% week to date as traders sold oil in droves as the week began, plunging the commodity into negative territory for the first time ever, basis the May expiration futures contract, causing an upheaval in crude oil ETFs like the United States Oil Fund (USO) as well.
“Looking ahead, it’s still all about demand for oil right now, and so far there is little evidence to support the idea that consumer growth is going to rebound anytime soon,” said Tom Essaye, founder of The Sevens Report.
Gilead also affected stocks this week, as investors hoping for a viable treatment for the coronavirus pandemic were disappointed to learn Thursday that while the data suggests a “potential benefit,” the drug remdesivir failed to increase the improvement of patients with COVID-19 or prevent them from dying, according to results from a long-awaited clinical trial conducted in China.
Gilead stated that the study was “terminated early due to low enrollment,” leaving it “underpowered to enable statistically meaningful conclusions. As such, the study results are inconclusive.”
“I say wait until the American studies come out,” analyst Jim Cramer said in a tweet. “University of Chicago study is a lot more rigorous. I would stick with that. You don’t have to believe it…but this is the third time the Chinese have said the drug doesn’t work.”
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