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Merck Leads Dow Higher On COVID Treatment Hopes, Treasury Yields Holding Down Tech

The positive data from Merck's COVID treatment trial helped Dow futures turn higher Friday as investors enter the final, and often most difficult, three months of the year.

U.S. equity futures turned higher Friday, following on from the worst month for tech stocks since the peak of the pandemic, thanks to a solid early boost from data linked to Merck's late-stage coronavirus treatment pill 

Dow component Merck  (MRK ) - Get Free Reportsurged 9.7% to $82.40 each after the pharma group unveiled promising data for a COIVD antiviral treatment it said can cut the risk of hospitalization and death in at-risk patients by as much as 50%, offsetting broader market concerns linked to inflation, China growth and the recent surge in energy prices.

Soaring energy prices, exacerbated by a power crisis in China that has spilled over into markets all around the world, supply chain disruptions that are triggering profit warnings across several corporate sectors and wage increases linked to a record labor market shortage have lifted by benchmark Treasury bond yields and boosted inflation forecast, each of which have acted as a breaker on U.S. equity markets.

A stronger-than-expected reading for September factory activity, paired against the fastest annual increase in the Fed's preferred inflation gauge -- the PCE Price Index -- added to the market's complexity.

On the fiscal side, House Speaker Nancy Pelosi will once again attempt to bridge the gap between progressive and moderate Democrats Friday as she moves to pass a $1 trillion infrastructure bill that has divided the party for months after failing to reach an agreement last night.

The Dow Jones Industrial Average gained 230 points to kick-off the month of October over the first morning of trading, after the biggest monthly percentage drop for the 30-stock average since September of last year, paced by a 50 point boost from Merck.

The broader S&P 500, which notched a modest 0.23% third quarter gain despite the worst month of declines since March of 2020, gained 22 points into the green. The Nasdaq Composite futures, meanwhile, gained only 15 points as benchmark 10-year note yields held at 1.484% following mixed PCE inflation data.

Live Nation Entertainment  (LYV) - Get Free Report shares, a key re-opening play built on the group's concert and live performance schedule, surged 5% to $95.80 each on the heels of Merck's antiviral treatment trial. 

Five9  (FIVN) - Get Free Report was also active, rising 1.5% to $162.30 each after shareholders rejected a $14.7 billion all-stock takeover bid from Zoom Video Communications.  (ZM) - Get Free Report Zoom was marked 1.5% higher at $2653.75 each.

In Europe, stocks slumped to a two-month low in early trading, lead by declines for cyclicals and travel companies, but pared those declines even as data showed Eurozone inflation surged 3.4% -- the fastest pace since 2008 -- over the months of September. 

Oil prices were also active, and within touching distance of their recent three-year highs, amid demand concerns linked to the ongoing factory and manufacturing slowdown in China.

WTI futures for November delivery traded 15 cents higher on the session at $75.18 per barrel while Brent contracts December, the global pricing benchmark, were 28cents higher at $78.60 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, eased from 2021 highs to trade at 94.004.

More Market Recaps For the Week of 9/27:

9/27 - Dow Ends Higher on Rising Oil, Financial Stocks

9/28 - Dow Ends Down Over 500 Points, Nasdaq Has Worst Close Since March

9/29 - Dow Ends Higher, Nasdaq Slips in Mixed Trading

9/30 - Stocks Slide As Brutal September Comes To A Close; Retail Pounded On Supply Chain Worries