Stock futures extended gains Wednesday evening as investor optimism over a potential coronavirus treatment and a batch of strong earnings results buoyed risk assets.
Market participants took most of the major corporate earnings results posted Wednesday afternoon in stride, even as the impacts of the coronavirus permeated commentary in the reports. Facebook, Tesla and Microsoft each reported quarterly sales growth over last year, as the company’s products and services showed strong demand at the start of the pandemic’s domestic escalation. Shares of each of these companies rose in late trading.
Earlier, positive results from a clinical trial of Gilead’s coronavirus antiviral treatment candidate helped fuel a sharp rally in stocks on Wednesday, with each of the three major indices up at least 2.2%. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, said the results were “quite good news,” stoking investor optimism.
Hopes for the near-term approval of a treatment and prospects that this could expedite a return to some semblance of normalcy for businesses closed during the coronavirus outbreak eclipsed the latest batch of dismal economic data on Wednesday. U.S. gross domestic product contracted by the most since the fourth quarter of 2008 in the first three months of the year, and consumer spending – the biggest portion of domestic economic activity – shrank by the most in 40 years.
The coming months are likely to be even worse. But as expectations grow more somber, policymakers reaffirmed their commitment to support the domestic economy with a wide range of stimulus measures. On the heels of a pair of emergency rate cuts and unscheduled new programs released over the past month, the Federal Reserve said on Wednesday it would keep interest rates near zero for the foreseeable future, “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
“Stocks are rallying like crazy and we do mean crazy in part because of the decisive actions the Fed took earlier last month,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in an email Wednesday.
“The announcement of unlimited QE [quantitative easing] the same day the stock market bottomed in March was music to investors' ears. Stocks have rallied ever since that day that the Fed went all-out,” he added. “Stocks keep rallying as the coronavirus pandemic curve of positive cases continues to improve and the states are starting to open back up again which means the GDP recession is just temporary.”
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6:06 p.m. ET Thursday: Stock futures open higher
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:06 p.m. ET:
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S&P 500 futures (ES=F): up 11.5 points, or 0.39%, to 2,952.50
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Dow futures (YM=F): down 86 points, or 0.35%, to 24,652.00
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Nasdaq futures (NQ=F): up 53.5 points, or 0.59%, to 9,090.00
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