US Stock Market Overview – Stocks Surge on Gilead News; GDP Contracts; Fed Leave Rates Unchanged

 

US stocks surged higher on Monday following comments from drug company Gilead, who said that they saw promising results from their trials that are taking place in the United States. This was the first commentary from Gilead which helped substantially buoy stock prices. The move came ahead of the opening bell and counter the worse than expected US Q1 GDP which came in worst than expected. Additionally, the Fed left interest rates unchanged on Wednesday and said they would keep rates at zero for an indefinite period and do anything possible to help buoy US economic growth. Powell was on the tape saying that preserving the flow of credit is essential for financial success. He also said that the Fed’s purchases have been helping the US economy. They will not be in a hurry to withdraw measures or rates, which means there is a floor under stock prices. The Fed put is now back in place which could drive share prices even higher.

The Fed Kept Rates Unchanged

The Federal Reserve kept interest rates unchanged on Wednesday and did not announce any new policy. The Fed Chair Powell said that the Fed was committed to using a full range of tools to support the US economy. While economic data will be worse than anything that the US has ever seen, the Fed believes they can rescue economic growth. The Fed Chair said that supporting business and Households will prevent long term damage to the US economy.

 

US GDP Came in Worse than Expected

The US Commerce Department reported that the US economy shrank at its fastest pace since the last recession in the Q1 due to the coronavirus pandemic. GDP contracted at a rate of 4.8% in the first three months of 2020. The decline marks the beginning of a near-certain recession, which takes two consecutive negative growth rates. This is the biggest drop in quarterly economic output since the fourth quarter of 2008.

Gilead News Boost Stocks

White House health advisor Dr. Anthony Fauci said that the data that was reported from a coronavirus drug trial testing Gilead Sciences’ antiviral drug remdesivir showed “good news” and sets a new standard of care for Covid-19 patients. This helped further buoy stocks after the company earlier announced promising results.