Gilead (NASDAQ:GILD) isn’t a member of the Dow Jones Industrial Average, but reports out today that the company’s drug remdesivir is proving effective in treating the novel coronavirus were one reason why broader equity benchmarks surged.
Source: Provided by Finviz
- The S&P 500 jumped 2.66%.
- The Dow Jones Industrial Average tacked on 2.21%
- The Nasdaq Composite soared 3.57%
- Its first-quarter earnings report was bad (no surprise there) and the company announced it would cut 10% of its workforce, but Boeing (NYSE:BA) was still the Dow’s top performer today, surging 6.16%.
The remdesivir news took precedence over headlines about first-quarter GDP, which contracted 4.8%. That’s the worst shrinkage experienced by the world’s largest economy since the dark days of the global financial crisis.
On a related note, the Federal Reserve held interest rates near zero, with Chairman Jerome Powell acknowledging the current quarter will bring more weak economic data while saying the central bank “will use its tools and act as appropriate to support the economy.”
Powell added that there are “medium-term” risks to the economy, but that didn’t derail stocks’ ascent today as 26 of 30 Dow components were higher in late trading.
Sympathy Plays
Boosted by better-than-expected earnings from rival Mastercard (NYSE:MA), Dow members American Express (NYSE:AXP) and Visa (NYSE:V) were the next-best performers in the benchmark after Boeing.
In the case of American Express, there’s probably some likely some remdesivir ebullience behind today’s rally. The sooner the coronavirus is put to bed, the sooner business and leisure — two vital components of the Amex story — can start rebounding.
As for Visa, the Mastercard numbers are notable because the Dow member delivers its own earnings report Thursday after the close.
Reopening…Maybe
Disney (NYSE:DIS) is facing uncertainty regarding when Disney World in Florida and Disneyland in California will reopen, but speculation that the former could open sometime over the next several weeks lifted the stock today.
At this point in the coronavirus cycle for companies with heavy tourism exposure, something is better than nothing. But investors banking on more of the same news out of California helping Disney probably shouldn’t. Golden State policymakers are under pressure to relax the current stay-at-home order, but it’s hard to imagine the state reopening theme parks in the near-term.
Apple Warning
Don’t worry, Apple (NASDAQ:AAPL) itself isn’t issuing a warning in advance of its Thursday afternoon earnings report, but an analyst is telling investors to not expect a major 5G upgrade supercycle for the iPhone maker.
“We do not expect 5G to trigger a supercycle and believe the consensus revenue and EPS estimates for 2021 are too optimistic about the impact of 5G on iPhone sale,” said LightShed Partners analysts Walter Piecyk and Joe Gallone in a note out earlier today.
Retreating From Walmart
Closing lower by almost 3%, WalMart (NYSE:WMT) was by far the worst Dow offender today Gordon Haskett’s Chuck Grom downgraded the stock, citing valuation concerns. Interestingly, the analyst raised his price target on the retail behemoth to $140 from $130. Go figure.
Bottom Line on the Dow Jones Today
Not to be lost in the remdesivir news is the fact that, as noted above, U.S. GDP slid 4.8% in the first three months of the year. That’s one way, and an accurate one at that, of quantifying the impact of Covid-19, but long-term consequences may not be as dire as market participants previously believed.
“Current economic forecasts, including the most pessimistic, imply long-run economic consequences that are much less severe than the post-global financial crisis impact in both the U.S. and euro area,” according to BlackRock.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.