The S&P 500 has ended marginally lower after a report that an experimental antiviral drug for the coronavirus flopped in its first randomised clinical trial, denting earlier optimism that the impact of the pandemic on the labour market was nearing an end.
All three main US stock indexes fell back from gains of more than one per cent after the Financial Times reported a Chinese trial showed Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.
Gilead said the results from the study were inconclusive as it was terminated early.
Last Friday, Wall Street rallied in part because of a report that COVID-19 patients in a separate study had responded positively to remdesivir.
The market’s sensitivity to news related to coronavirus therapies reflects investors’ desperation for any indication of when the global economy might be able to start returning to normal.
David Katz, chief investment officer at Matrix Asset Advisors, said the latest drop was not unusual given the outcome of Gilead’s trial.
“The hope as of last week was that Gilead could take the fear of dying off the table, which would result in a much quicker, cleaner, faster recovery. If that’s less likely today than it was yesterday, it is perfectly reasonable for the market to have sold off,” he said.
Stocks rallied earlier in Thursday’s session after data showed weekly US jobless claims fell to 4.43 million from a revised 5.24 million.
However, the numbers were still staggering, taking the total in the past five weeks to a record 26 million and wiping out all the jobs created since the financial crisis.
Ryan Detrick, senior market strategist at LPL Financial, said Wall Street was doing better than expected.
“The disappointing drug news stings, but considering another four million people lost their jobs, the disconnect between how well stocks have held up in the face of historically bad economic data continues,” he said.
Meanwhile, the US Congress was preparing nearly $US500 billion more in aid for small businesses and hospitals, which was expected to clear the House of Representatives later in the day.
The energy index rose three per cent, easily leading the 11 S&P 500 sectors as oil prices recovered in a tumultuous week that saw US crude futures crash below zero for the first time in history.
US stock indexes have rallied this month on a raft of global stimulus, but the benchmark S&P 500 remains more than 15 per cent below its record high as worsening economic indicators foreshadow a deep global recession.
A survey showed US business activity plumbed new record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending.
The CBOE volatility index has retreated from 12-year peaks hit last month, but remains well above levels seen in the past two years and analysts have warned of another sell-off as corporate America issues worrying forecasts for the year.
The Dow Jones Industrial Average rose 0.17 per cent to end Thursday at 23,515.26 points, while the S&P 500 lost 0.05 per cent to finish at 2797.8.
The Nasdaq Composite slipped 0.01 per cent to 8494.75.
Las Vegas Sands jumped 12 per cent after the casino operator predicted a speedy recovery in Asia on pent-up gambling demand.
In extended trade, Intel dropped more than five per cent after the chipmaker gave a quarterly profit forecast that missed analysts’ estimates.
Advancing issues outnumbered declining ones on the NYSE by a 1.64-to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favoured advancers.
The S&P 500 posted six new 52-week highs and one new low; the Nasdaq Composite recorded 36 new highs and 21 new lows.
Volume on US exchanges was 11.7 billion shares, compared with a 12.7 billion-share average over the last 20 trading days.