US stocks rebound as pharma firms show momentum in virus fight

United States stock markets closed higher Monday after President Donald Trump abandoned the idea of getting the economy back up and running by Easter (April 12) but as pharma companies signalled momentum is building in the fight against coronavirus. 

The Dow Jones Industrial Average closed up 690.70 points or 3.19 percent at 22,327.48.

The S&P 500 Index – a proxy for US retirement and college savings accounts – closed up 3.35 percent, while the tech-heavy Nasdaq Composite Index ended the session 3.62 percent higher. 

All three major US indexes soared last week after legislators in Washington passed a $2.2 trillion virus rescue package to help individuals, industries and businesses great and small knocked sideways by coronavirus containment measures. But the 30-share Dow and the S&P 500 are still down more than 20 percent from recent record highs.  

On Sunday, Trump ditched the idea of getting the economy back up and running in April and extended stay-at-home guidelines through the end of next month, after the director of the US National Institute of Allergy and Infectious Diseases, Dr Anthony Fauci, who has often contradicted Trump’s coronavirus claims, said the pandemic could ultimately kill between 100,000 and 200,000 Americans if mitigation efforts do not succeed.

Investors are still struggling to gain clarity on the extent of the economic damage wrought by the pandemic. Entire sectors of the global economy have shut down with a swiftness and severity that has drawn comparisons with the opening days of the Great Depression that started in 1929. 

“Strategically, we continue to expect the S&P 500 will rise to 3,000 by year-end 2020 as economic and earnings growth rebound from their 2Q trough,” Goldman Sachs strategists wrote in a note to clients on Monday. “Tactically, we believe it is likely that the market will turn lower in coming weeks.”

News of rising momentum in the battle against coronavirus helped drive healthcare shares higher. 

Shares of Johnson & Johnson gained 7.94 percent on the day after it said on Monday that plans to start human testing of its experimental coronavirus vaccine by September and make it ready for emergency use in early 2021.

And over the weekend, Abbott Laboratories said it had won US approval for a diagnostic test that can detect coronavirus in minutes.