Stocks were mixed Thursday, as Gilead (GILD) - Get Gilead Sciences Inc. Report Science’s human test of remdesivir reportedly largely failed, denting sentiment. And some on Wall Street are cautioning against headwinds to the economic recovery the market is pricing in.
The S&P 500 fell 0.06% Thursday, after having gained 1.2% by late morning. The 10 year treasury yield slipped marginally to 0.6%, as the liquidity-driven up market since March 23 continues to show itself as such. Gilead shares fell 4.3%. The S&P 500, richly valued at this point, is now down 2.4% for the week.
Gilead’s remdesivir drug, a coronavirus vaccine, disappointed in its human testing phase, which showed little change in treated patients, according to documents seen by the Financial Times and Stat News.
Gilead as since called the reports "inappropriate characterization" and "inconclusive."
Positive sentiment in early trading was boosted by a continued recovery in oil prices. Crude oil rose 23% to $17 a barrel, after having ben in negative price territory early in the week. The U.S. is one a large producer of oil, making potential capital spending and workforce cuts from producers a dangerous proposition for the economy.
Jobless claims for the past week were 4.4 million, bringing the total number of claims too 26 million people, or roughly 8% of the U.S. population. Most expect the unemployment rate to hit the mid teens in percentage terms. The market has looked past these troubles, pricing in an optimistic scenario of a sharp economic rebound.
On a related note, the small business administration may soon see an appropriation of an additional $300 billion plus amount for lending. That’s sort of a broader $484 billion fiscal spending bill the House will vote on. Some are worried that this isn’t enough cash for small businesses, which represent roughly 60% of American employment, to survive.
Here’s what Wall Street had to say on the broader market landscape:
Brian Overby, Senior Options Analyst, Ally Invest:
“What’s going to increase [oil] demand? We don’t know where we’re at with the coronavirus. We’re still in lockdown. Driving cars would be a big spike in demand. If you’re going to have that spike to the $40 level, you’d need something that’s going to spike demand. It’s more so about jobs and producers that can hurt our economy than the actual price of oil. Companies are closing wellheads now so you expect a big spike in job losses over the next month.”
Seema Shah, Chief Strategist, Principal global Investors:
"Just as the pandemic has likely reached an inflection, jobless claims likely have too. A further gradual decline from here should be expected, but it is unclear how much of the jobless claim surge can be undone by the Payroll Protection Program. Indeed, while claims have moved past the peak, continuing claims continue to grow, providing an indication of how many people are staying out of work, despite the considerable support provided by the US government. This is where most of the focus will move to from now, and the more unemployment rises, the slower the eventual recovery may be. At this stage, the signs are not promising.”
Lauren Goodwin, Economist, Multi-Asset Strategist, New York Life Investments:
“It [stimulus Bill] won’t be enough to resolve the credit risk businesses face as a result of the shutdown. Policy support for businesses and households through the crisis has been sizable and swift, but we see strong indication that demand destruction is larger. The backlog of PPP loan applications shows that the program could run out of money again in a matter of days. Policymakers are on a race against time. The longer that the crisis drags on, the more likely a further economic and credit dislocation becomes. Early signs of “return to work” are promising, but the process is likely to be slow and non-linear, creating risks for investors."