The S&P 500 ended marginally lower on Thursday after a report that an experimental antiviral drug for the coronavirus flopped in its first randomised clinical trial, denting earlier optimism that the impact of the pandemic on the United States labour market was nearing an end.
The Dow Jones Industrial Average rose 0.17 percent to close at 23,515.26. The S&P 500 – a gauge of the health of US retirement and education savings accounts – lost 0.05 percent to close at 2,797.8. The tech-heavy Nasdaq Composite Index dropped 0.01 percent.
The Financial Times reported that a Chinese trial showed that Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.
Gilead said the results from the study were inconclusive as it was terminated early.
Last Friday, Wall Street rallied in part because of a report that COVID-19 patients in a separate study had responded positively to remdesivir.
The market’s sensitivity to news related to coronavirus therapies reflects investors’ desperation for any indication of when the global economy might be able to start returning to normal.
“The hope as of last week was that Gilead could take the fear of dying off the table, which would result in a much quicker, cleaner, faster recovery. If that’s less likely today than it was yesterday, it is perfectly reasonable for the market to have sold off,” said David Katz, chief investment officer at Matrix Asset Advisors.
Stocks rallied earlier in the session after data that showed weekly US jobless claims fell to 4.43 million from a revised 5.24 million. However, the numbers were still staggering, taking the total in the past five weeks to a record 26 million and wiping out all the jobs created since the financial crisis.
“The disappointing drug news stings, but considering another four million people lost their jobs, the disconnect between how well stocks have held up in the face of historically bad economic data continues,” said Ryan Detrick, senior market strategist at LPL Financial.
Meanwhile, the US Congress was preparing nearly $500bn more in aid for small businesses and hospitals, which was expected to clear the House of Representatives later in the day.
The energy index rose three percent, easily leading the 11 S&P 500 sectors as oil prices recovered in a tumultuous week that saw US crude futures crash below zero for the first time in history.
US stock indexes have rallied this month on a raft of global stimulus, but the benchmark S&P 500 remains more than 15 percent below its record high as worsening economic indicators foreshadow a deep global recession.
A survey showed US business activity plumbed new record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending.
The CBOE volatility index has retreated from 12-year peaks hit last month, but remains well above levels seen in the past two years, and analysts have warned of another selloff as corporate America issues worrying forecasts for the year.