U.S. stocks were poised to open higher Wednesday as upbeat data on coronavirus treatment from Gilead Sciences offset fresh figures that showed U.S. economic growth contracted more than expected in the first quarter.
Futures for the Dow Jones industrial average climbed 300 points, a day after the blue-chip average snapped four straight days of gains. Standard & Poor’s 500 futures rose 1.3%.
Shares of Gilead jumped 9% in pre-market trading after being briefly halted as the National Institute of Allergy and Infectious Diseases said a study of the company's remdesivir drug met its primary endpoint, boosting expectations for a potential treatment for the disease.
It comes as data revealed the U.S. economy, largely shut down by the coronavirus pandemic, ended the longest economic expansion on record.
U.S. gross domestic product, the value of all goods and services produced in the U.S., contracted at a seasonally adjusted annual rate of 4.8% in the January-March period as both consumer and business spending fell sharply, the Commerce Department said Wednesday. It marked the first drop in output since early 2014 and the steepest since late 2008 during the depths of the Great Recession.
Economists surveyed by Bloomberg had forecast a 3.8% decline in GDP.
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Investors who want to know when the deepest global downturn since the 1930s might end have been encouraged by plans to reopen factories, retailing and travel. Economists warn they are too optimistic and say evidence is mounting that the damage is even worse than forecast.
“The economic data this morning are backward-looking and markets will continue to be forward-looking, trying to anticipate a resumption of economic activity in the short run and a vaccine or cure in the medium turn,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in a note. “Given all of the stimulus in the system, markets can continue to move higher, but we remain cautious as a lot of future good news is already priced in.”
Investors seemed buoyed as more governments plan to ease anti-virus controls and allow businesses to reopen. The French and Spanish governments announced plans Tuesday to allow restaurants and other businesses to reopen gradually. They followed Italy, which announced similar plans on Sunday.
The virus has killed more Americans than the Vietnam War from 1955 to 1975, with more than 58,300 deaths as of early Wednesday, according to John Hopkins University data. Worldwide, there are over 3 million confirmed cases and more than 217,100 deaths.
The Fed is not expected to take any major actions after the end of its two-day meeting Wednesday, having already deployed massive amounts of stimulus to help credit flows and businesses. However there will be interest in its views, with Fed Chairman Jerome Powell holding a news conference.
London’s FTSE advanced 0.9% and the DAX in Frankfurt added 0.3%. The CAC 40 in France shed 0.2%. In Asia, the Shanghai Composite Index closed 0.4% higher and Hong Kong’s Hang Seng added 0.3%. The Kospi in Seoul advanced 0.7%.
Contributing: The Associated Press