US stocks surged early Friday as Wall Street cheered a promising coronavirus treatment as well as President Trump’s push to reopen the US economy.
The Dow Jones industrial average jumped as much as 612.52 points, or 2.6 percent, in early trading following a report that Gilead Sciences’ Ebola drug remdesivir is helping coronavirus patients recover quickly.
The S&P 500 and Nasdaq Composite also posted early gains as large as 2.2 and 1.6 percent, respectively, following the news, which helped Gilead shares open the day 11.2 percent higher at $85.17.
“What this reinforces is how biotech companies, Big Pharma, universities globally are pushing for a therapy and a vaccine,” said Quincy Krosby, chief market strategist at Prudential Financial. “And that’s what the market wants to see, because you can lift the restrictions, but what you have to have is that the consumer feels comfortable about resuming a life outside of isolation.”
The rally also came after Trump unveiled new guidelines Thursday for reopening locked-down states as soon as May 1 to restart the coronavirus-battered economy.
While Trump said he would let states determine when to relax their own restrictions, he stressed that shutdowns imposed in much of the country are not sustainable for the economy in the long term. The lockdowns have forced many businesses to shut their doors and lay off workers, leading to 22 million applications for unemployment benefits in a month.
“I think it’s just another voice now in the federal government … that it’s time to get things moving,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “Even if it’s slow and steady and safe, whatever, that’s still a sea change from where we’ve been here.”
Trump’s push to reopen the country led to “increased risk appetite” among investors — but a restart is risky given that the virus is still running rampant in the states, according to AxiCorp market analyst Milan Cutkovic.
“The current situation in the United States can hardly be described as stable, and a second wave of infections due to the premature lifting of current restrictions could do even greater damage and lead to an extended lockdown,” Cutkovic said.
The US has recorded more than 672,000 coronavirus cases — far more than any other country — and more than 33,000 deaths, according to a Johns Hopkins University tally.
Investors will be closely watching European countries that have started lifting restrictions to see whether they see a subsequent spike in cases, according to Krosby.
“That would send a cautionary tone into the markets,” she said.