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U.S. equity markets soared Wednesday as upbeat news about a potential coronavirus treatment from drugmaker Gilead Sciences helped offset a larger-than-expected drop in first-quarter gross domestic product.
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The Dow Jones Industrial Average gained 449 points, or 1.86 percent, in the opening minutes of trading while the S&P 500 and the Nasdaq Composite rose 2.04 percent and 2.03 percent, respectively.
The U.S. economy contracted 4.8 percent in the first quarter, according to an advanced reading from the Commerce Department, outstripping the 4 percent drop that economists surveyed by Refinitiv were expecting. The negative print was the first in six years and the biggest since the financial crisis.
The GDP report came as the Federal Reserve wraps up its April meeting, at the conclusion of which the central bank is expected to give an assessment of COVD-19’s impact on the U.S. economy and the impact its lending programs are having on credit flow to businesses and consumers.
Drugmaker Gilead Sciences announced positive data was emerging from the National Institute of Allergy and Infectious Diseases’ study of using the antiviral drug remdesivir for the treatment of COVID-19.
Meanwhile, earnings season continued with Dow component Boeing and a number of other high-profile companies releasing their quarterly results.
Boeing reported a first-quarter loss of $641 million as COVID-19 and the grounding of the 737 MAX eroded sales. The aerospace giant expects to begin production of the 737 MAX at low rates in 2020 before ramping up to 31 per month in 2021.
Revenue at Alphabet jumped 13 percent year-over-year as “stay-at-home” orders drove traffic to Google, YouTube and cloud-based services. While Google’s advertising business was strong in January and February, there was a sharp slowdown in March as the virus’ outbreak forced the delay of ad campaigns.
Starbucks reported second-quarter profit fell 50 percent from a year ago as COVID-19 forced the coffee chain to limit operations around the world. Same-store sales slipped 3 percent in the U.S. and 10 percent globally. Comparable sales in China tumbled 50 percent, though most of those stores have since reopened.
General Electric said first-quarter profit spiked 73 percent despite COVID-19 causing a “dramatic decline” in its commercial aerospace business. GE warned results in the April-through-June period will see a sequential decline due to the virus.
Elsewhere, Uber announced chief technology officer Thuan Pham will step down effective May 16. The news comes amid a report the company is considering cutting 20 percent of its workforce as COVID-19 crushes demand for the service.
Facebook, Microsoft and Tesla are among the names reporting after the closing bell.
Looking at commodities, West Texas Intermediate crude oil surged 25 percent to $15.47 a barrel after an inventory report from the American Petroleum Institute showed stockpiles grew less than expected. The official report from the U.S. Energy Information Administration is due out at 10:30 a.m. ET. Gold slipped 0.52 percent to $1,713 an ounce.
U.S. Treasurys gained, pushing the yield on the 10-year note down by 0.7 basis points to 0.603 percent.
European markets were higher, with Britain’s FTSE up 2.2 percent, Germany’s DAX climbing 2.11 percent and France’s CAC advancing 1.62 percent.
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In Asia, China’s Shanghai Composite gained 0.44 percent and Hong Kong’s Hang Seng added 0.28 percent while Japan’s Nikkei was closed for a holiday.
