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U.S. stocks closed sharply higher on Wednesday following positive clinical trial data of a drug for potential coronavirus treatment. Moreover, Fed Chairman Jerome Powell's statement to do whatever needed to strengthened U.S. economy also bolstered investors' confidence. All three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 2.2% or 532.31 points to close at 24,633.86. Notably, 23 components of the 30-stock blue-chip index ended in green while 7 finished in the red. Meanwhile, the S&P 500 soared 2.7% to close at 2,939.51. The Energy Select Sector SPDR (XLE) and Communication Services Select Sector SPDR (XLC) rallied 7.4% and 4.8%, respectively. Nine out of eleven sectors of the benchmark index closed in the green while two ended in red.
The tech-heavy Nasdaq Composite closed at 8,914.71, climbing 3.6% or 306.98 points due to the strong performance of large-cap tech stocks. Alphabet Inc. (GOOGL - Free Report) jumped 8.9% after the company's latest earnings report revealed that the effect of coronavirus on the tech giant's advertisement revenues were not as severe as expected. Micron Technology Inc. (MU - Free Report) also rallied 10%. Micron has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The fear-gauge CBOE Volatility Index (VIX) decreased 7% to close at 31.23. A total of 12.71 billion shares were traded on Wednesday, higher than the last 20-session average of 12.28 billion. Advancers outnumbered decliners on the NYSE by a 6.73-to-1 ratio. On Nasdaq, a 4.29-to-1 ratio favored advancing issues.
Positive Data of Remdesivir Coronavirus Drug Trial
Gilead Sciences Inc. (GILD - Free Report) released preliminary results of its coronavirus drug remdesivir. The company own study showed at least 50% of the patients treated with a five-day dosage of remdesivir improved. The clinical trial was conducted on 397 patients with severe cases of Covid-19. This was a “single-arm" study meaning it did not evaluate the drug against a control group of patients who didn’t receive the drug.
The FDA is constantly in touch with the company to make the drug available to Covid-19 patients “as quickly as possible, as appropriate.” White House health advisor Dr. Anthony Fauci said that the positive clinical trial data of remdesivir is “quite good news” and sets a new standard of care for Covid-19 patients.
Fed Reaffirms Maintaining Dovish Monetary Stance
The Fed reiterates that it will maintain the current benchmark interest rate of 0-0.25% so long the economy achieves full employment and inflation reached to its long-stated 25 level. In its latest FOMC statement, the central bank said “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Economic Data
U.S. GDP for the first-quarter 2020 contracted 4.8% compared with an expansion of 2.1% in the previous quarter. The consensus estimate was for a decline of 4%. This marks the first negative GDP quarter since the first-quarter 2014 and reflects the highest decline in GDP in any quarter since the fourth-quarter 2008.
Notably, consumer spending, the largest component (67%) of the GDP plunged 7.6%. Durable goods spending plummeted 16.1% while expenditures on services declined 10.2%.Goods consumption dropped1.3% while services shed 10.2%.
The National Association of Realtors reported that pending home sales plummeted 20.8% in March. This represented the lowest level of pending sales since 2011.
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Stock Market News for Apr 30, 2020
U.S. stocks closed sharply higher on Wednesday following positive clinical trial data of a drug for potential coronavirus treatment. Moreover, Fed Chairman Jerome Powell's statement to do whatever needed to strengthened U.S. economy also bolstered investors' confidence. All three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 2.2% or 532.31 points to close at 24,633.86. Notably, 23 components of the 30-stock blue-chip index ended in green while 7 finished in the red. Meanwhile, the S&P 500 soared 2.7% to close at 2,939.51. The Energy Select Sector SPDR (XLE) and Communication Services Select Sector SPDR (XLC) rallied 7.4% and 4.8%, respectively. Nine out of eleven sectors of the benchmark index closed in the green while two ended in red.
The tech-heavy Nasdaq Composite closed at 8,914.71, climbing 3.6% or 306.98 points due to the strong performance of large-cap tech stocks. Alphabet Inc. (GOOGL - Free Report) jumped 8.9% after the company's latest earnings report revealed that the effect of coronavirus on the tech giant's advertisement revenues were not as severe as expected. Micron Technology Inc. (MU - Free Report) also rallied 10%. Micron has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The fear-gauge CBOE Volatility Index (VIX) decreased 7% to close at 31.23. A total of 12.71 billion shares were traded on Wednesday, higher than the last 20-session average of 12.28 billion. Advancers outnumbered decliners on the NYSE by a 6.73-to-1 ratio. On Nasdaq, a 4.29-to-1 ratio favored advancing issues.
Positive Data of Remdesivir Coronavirus Drug Trial
Gilead Sciences Inc. (GILD - Free Report) released preliminary results of its coronavirus drug remdesivir. The company own study showed at least 50% of the patients treated with a five-day dosage of remdesivir improved. The clinical trial was conducted on 397 patients with severe cases of Covid-19. This was a “single-arm" study meaning it did not evaluate the drug against a control group of patients who didn’t receive the drug.
The FDA is constantly in touch with the company to make the drug available to Covid-19 patients “as quickly as possible, as appropriate.” White House health advisor Dr. Anthony Fauci said that the positive clinical trial data of remdesivir is “quite good news” and sets a new standard of care for Covid-19 patients.
Fed Reaffirms Maintaining Dovish Monetary Stance
The Fed reiterates that it will maintain the current benchmark interest rate of 0-0.25% so long the economy achieves full employment and inflation reached to its long-stated 25 level. In its latest FOMC statement, the central bank said “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Economic Data
U.S. GDP for the first-quarter 2020 contracted 4.8% compared with an expansion of 2.1% in the previous quarter. The consensus estimate was for a decline of 4%. This marks the first negative GDP quarter since the first-quarter 2014 and reflects the highest decline in GDP in any quarter since the fourth-quarter 2008.
Notably, consumer spending, the largest component (67%) of the GDP plunged 7.6%. Durable goods spending plummeted 16.1% while expenditures on services declined 10.2%.Goods consumption dropped1.3% while services shed 10.2%.
The National Association of Realtors reported that pending home sales plummeted 20.8% in March. This represented the lowest level of pending sales since 2011.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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