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Dow jumps 400 points after Gilead reported 'positive data' for its experimental coronavirus treatment

Dow jumps 400 points after Gilead reported 'positive data' for its experimental coronavirus treatment
  • Wall Street stocks rose on Wednesday following Gilead announcement
  • Data showed economy contracted at its sharpest pace since Great Recession 
  • Positive news from Boeing and Google parent Alphabet bolstered markets 
U.S. stock indexes jumped on Wednesday after Gilead Sciences said its experimental antiviral drug met the main goal of a trial testing it in COVID-19 patients.
At 9.31am, the Dow Jones Industrial Average was up 424.89 points, or 1.76 percent, to 24,526.44. The S&P 500 was up more than 1 percent and Nasdaq composite rose more than 2 percent. 
Gilead said Wednesday that preliminary results of a coronavirus drug trial showed at least 50 percent of patients treated with a 5-day dosage of antiviral drug remdesivir improved and more than half were discharged from the hospital within two weeks.
Markets have been watching closely for any sign of when Americans will be able get back to work, and immediately rose at the prospect of an effected treatment for the virus that has shuttered the economy. 
A view of the Fearless Girl statue with New York Stock Exchange in Wall Street on Tuesday
A view of the Fearless Girl statue with New York Stock Exchange in Wall Street on Tuesday
Meanwhile, new data showed the U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession, ending the longest expansion in history. 
Data from the Commerce Department said gross domestic product fell at a 4.8 percent annualized rate in the January-to-March period, while economists in a Reuters poll were expecting a contraction of 4 percent. 
Markets were bolstered by solid earnings reports from Google-parent Alphabet and Boeing provided some optimism as the country moved cautiously to ease lockdowns.
Alphabet Inc jumped 7.1 percent in premarket trading as a drop in Google ad sales steadied in April and some consumers returned to using the search engine for shopping in addition to finding coronavirus information.
'This is helping to reinforce the market leadership,' said Edward Park, deputy chief investment officer at London-based firm Brooks Macdonald.
Park added that positive results from companies like Alphabet added to the narrative that technology-related names have been less disrupted by coronavirus and therefore should continue to outperform.
Boeing reported a loss for the second straight quarter, but shares jumped 4 percent as the planemaker said it was confident of obtaining sufficient liquidity to fund its operations going forward. 
Music streamer Spotify also reported on Wednesday morning that its paid music subscribers surged to 130 million in the first quarter, as its business model proved more resilient than expected in the coronavirus lockdowns.
Music streamer Spotify reported on Wednesday morning that its paid music subscribers surged to 130 million in the first quarter
Music streamer Spotify reported on Wednesday morning that its paid music subscribers surged to 130 million in the first quarter
While usage on mobile devices and in cars dropped in the last few weeks of March, usage on video game consoles such as Microsoft's Xbox and Sony's PlayStation surged during the first quarter. 
'Work from home appears to be increasing streaming services in general, so we don't see users choosing between Netflix and Spotify,' Cascend Securities analyst Eric Ross said. 
General Electric Co fell 5.9 percent after its industrial businesses took a $1 billion hit to cash flow in the first quarter and warned the damage would worsen in the next three months.
Wall Street's main indexes closed down on Tuesday, as investors shifted out of growth stocks and into more value-oriented cyclical companies.
But the main indexes have recovered 30 percent from their lows in March, boosted by aggressive stimulus efforts and, more recently, hopes of an economic revival as states begin to relax lockdown measures.
The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession as strict lockdown measures curbed consumer activity, ending the longest expansion in the nation's history. 
Next up is a policy decision from the Federal Reserve and more corporate earnings reports from technology heavyweight Microsoft, social media giant Facebook and electric car-maker Tesla after the bell.
The Fed is slated to issue its policy statement at the end of its two-day meeting on Wednesday at 2pm, where the central bank is anticipated to reiterate its promise to do whatever it takes to support the world's largest economy.

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