U.S. markets and stock exchange traded funds jumped Wednesday on encouraging signs from Gilead Science’s latest update on a coronavirus or COVID-19 treatment.
On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 3.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 2.3%, and SPDR S&P 500 ETF (NYSEArca: SPY) rose 2.8%.
Gilead revealed its experimental antiviral treatment remdesivir improved symptoms for COVID-19 patients who were given the drug early, Reuters reports.
“Optimism is growing that remdesivir will get fast track approval, but traders need to exercise some caution as it has yet to be proven safe nor effective in treating COVID-19,” Edward Moya, senior market analyst at OANDA, told Reuters.
Further adding to the momentum on Wednesday, Google’s Alphabet Inc surged after its quarterly earnings report showed that a dip in ad sales leveled off in April, reducing fears of a coronavirus-related hit.
Meanwhile, investors brushed off data that reflected a weakening U.S. economy over the first quarter, with GDP contracting at its sharpest pace since the Great Recession.
“When you combine the news on the earnings front, which is not necessarily worse than expected and…states that are beginning the reopening process, people are trying to anticipate how quickly the economy is going to recover,” Christopher Zook, Chief Investment Officer of CAZ Investments, told Reuters.
Investors are now waiting on any policy updates from the Federal Reserve as the central bank ends its two-day meeting Wednesday. Fed Chairman Jerome Powell will provide a clearer picture of the available tools and options that policymakers can still utilize as the coronavirus pandemic drags on the global economy. However, officials have largely ruled out a negative rate environment.
“They are going to be broadly supportive of the markets, the economy and signal a continuing commitment to further ramp up interventions if necessary, to support the recovery,” Tony Roth, chief investment officer at Wilmington Trust, told Reuters.
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