Plus, the Trump administration unveiled guidelines for states to consider when reopening, China reported its first contraction in GDP since it began reporting the quarterly figure, and Procter & Gamble reported earnings.
Stocks rallied to start Friday with the Dow gaining 500 points, or more than 2%. The S&P 500 traded 1.8% higher, while the Nasdaq added 0.9%.
Stocks rose higher after a report said Gilead Sciences’ experimental drug remdesivir showed some effectiveness in treating the coronavirus, giving investors hope of a treatment solution that would help the U.S. reopen faster from the widespread shutdowns that have plunged the economy into a recession. A report from medical news publication Stat, citing a video made by a researcher at the University of Chicago who is helping conduct an ongoing trial of remdesivir in COVID-19 patients, said that the drug has produced “rapid recoveries in fever and respiratory symptoms,” speeding up the discharge time. While Gilead shares are currently up more than 8%, and surged more than 16% in after-hours trading Thursday, both Gilead and the University of Chicago warned that the report should be interpreted with caution with the University of Chicago saying in a statement, “drawing any conclusions at this point is premature and scientifically unsound.” That sentiment was echoed by analysts, with several noting the anecdotal report was encouraging, but that the market reaction is overdone in the near term. “While the article paints a pretty picture, we think the ensuing exuberance shows a lack of critical analysis,” said Baird analyst Brian Skorney in a note. “This is uncontrolled, anecdotal data, which often winds up not being confirmed in controlled studies.”
Moderna shares also got a boost this morning after the biotech said it has received as much as $483 million in federal funding to accelerate development of a coronavirus vaccine. MRNA shares are up more than 13% at the time of writing. Moderna partnered with the National Institutes of Health on the development of its COVID-19 vaccine, launching a phase 1 human trial in the Seattle area in mid-March. Moderna CEO Stephane Bancel said this morning that the company hopes to have safety data from the phase 1 trial this spring, which could allow it to advance to the phase 2 trial with “hundreds of healthy subjects” in the second quarter. Moderna hopes to sated the third phase involving thousands of people in the fall, depending on results from the preceding stages. Bancel also added that the company plans to hire up to 150 people to support the effort to make the vaccine in tandem with the human trials. “Instead of waiting for the data and then scaling up with manufacturing process,” Bancel said, “we can make as many doses as we can. We are doing both in parallel.”
The Trump administration unveiled its guidelines for states to begin reopening following the historic shutdown to slow the spread of the coronavirus, offering hope that the world’s largest economy has a path to getting back up and running. The 18-page “Opening Up America Again” plan identifies the circumstances necessary for areas of the country to allow workers to start returning to work, however, the decision to lift restrictions will ultimately be made by state governors, and the plan gives no time frame, seeks no specific action, and offers little federal assistance, while businesses must come up with their own protocols. President Trump said as many as 29 states may be ready to reopen soon, naming Montana, North Dakota, and Wyoming, though cases in two out of those three are still rising. Meanwhile, Senate Minority Leader Chuck Schumer said this morning that congressional Democrats and the Trump administration will work through the weekend to try to strike a deal on an emergency bill to replenish the program to assist small businesses damaged by the coronavirus shutdown. “We’ve had constructive talks,” Schumer said. “They’re going to continue through the weekend, and I don’t see any reason why we can’t come to an agreement soon.”
The coronavirus pushed China’s economy into its first contraction in decades with gross domestic product shrinking 6.8% from a year ago in the first three months of 2020, the worst performance since at least 1992, when official quarterly GDP records began. In the first quarter, industrial production in the world’s second-largest economy dropped 8.4%, fixed-asset investment fell 16.1%, and retail sales fell 19%. With many of the restrictions in China now lifted, attention is turning to what its recovery is beginning to look like to give an idea of how the recovery will look globally. “What is really important was that before March, everybody was expecting China to have a V-shaped recovery because it was actually (about) China supply disruption (initially), but now we are seeing this demand shock,” said Bo Zhuang, chief China economist at TS Lombard. “The internal demand shock was massive. That tells us that after coronavirus, even after the lockdowns have been lifted, people are cautious to consume. Shopping malls are open but they are not consuming, and that is the key.”
And Procter & Gamble reported its U.S. sales surged 10% in its fiscal third-quarter as consumers stocked up on staples like Charmin toilet paper and Bounty paper towels ahead of the coronavirus shutdown. The company reported earnings of $1.17 per share on $17.2 billion in sales in the quarter, compared to estimates for earnings of $1.13 on $17.3 billion in sales. “The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,” said CEO David Taylor in the company’s press release. Procter & Gamble COO and CFO Jon Moeller said that the coronavirus pandemic could spark permanent changes in consumer behavior when it comes to some products. “We will serve what will likely become a forever-altered health, hygiene and cleaning focus for consumers who use our products daily or multiple times each day,” Moeller said.
Stocks We’re Watching
Arcus Biosciences Inc (NYSE: RCUS): Arcus Biosciences shares surged as much as 99% yesterday on reports that Gilead Sciences is considering acquiring a stake in the cancer therapeutics company. Arcus has reportedly held discussions about Gilead taking a significant stake, and also about possible development partnerships. The move, if it comes into fruition, would give Gilead access to Arcus’ robust, yet early-stage pipeline of unique immuno-oncology assets, such as the anti-TIGIT monoclonal antibody AB154, PD-1 inhibitor zimberelimab, and dual A2a/A2b adenosine receptor antagonist AB928. Google-parent Alphabet is the largest shareholder in Arcus, owning roughly 11%.