Stocks jumped Wednesday on the back of positive data from a potential coronavirus treatment from Gilead Sciences, while investors digested a sharp drop in U.S. economic activity. 

The Dow Jones Industrial Average surged 576 points, or 2.4%. The S&P 500 gained 2.8% while the Nasdaq Composite traded 3.6% higher. The major averages held onto their gains after the Federal Reserve pledged to keep rates lower for as long as needed. 

Wednesday’s gains put the S&P 500 up more than 14% for the month. That would be the index’s biggest one-month gain since 1974. The Dow is up 12.8% for April and is headed for its biggest monthly gain since 1987. 

A study of Gilead’s remdesivir drug conducted by the National Institute of Allergy and Infectious Diseases met its primary endpoint, the drugmaker said, lifting expectations for a potential coronavirus treatment. Gilead also released the results of its own study, which showed improvement in patients taking remdesivir to treat the virus. Gilead shares jumped 9.4% after a brief halt in the premarket. 

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said remdesivir shows a “clear-cut” positive effect when treating the virus. 

“Markets are going to move like this on this kind of news,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “If we had a vaccination, then I think you would see a very different economic recovery. If we have treatments, I think you’ll see a little bit quicker of an economic recovery.”

“We’ll take these days, but we’re not investing or changing any of our asset allocation because one day,” Horneman said.

Sentiment was also lifted as Alphabet shares gained 8.7% after the tech giant reported a revenue growth decline that was less steep than forecast. The company’s YouTube ad revenues also beat expectations. 

Other mega-cap tech stocks such as Facebook climbed 6.5%. Amazon gained 2.1% while Apple advanced 3.3%.

The Gilead news along with the strong move higher from Alphabet offset news of a steep drop in U.S. economic activity. U.S. GDP shrank by 4.8% in the first quarter for the country’s biggest contraction since the financial crisis. 

Fed on hold

The Fed kept interest rates at the near-zero bound on Wednesday, noting it will maintain its historically aggressive stance for as long as the economy needs it. 

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the committee said in its post-meeting statement. 

Fed Chairman Jerome Powell is scheduled to answer questions at 2:30 p.m.

Stocks fell slightly on Tuesday as a slide in mega-cap tech shares put pressure on the broader market. The S&P 500 ended the day 0.5% lower, but the equity benchmark is still up more than 10% this month alone.

President Donald Trump said in a press conference Tuesday the U.S. will “very soon” run five million coronavirus tests per day. To date, the most tests the U.S. has run on any single day was 314,182 on April 22, according to the Covid Tracking Project. The lack of testing remains an obstacle for many states anxious to reopen for business.

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