Stocks jump thanks to hopes for a potential drug to treat corona
US stocks opened higher on Wednesday after a hopeful update from Gilead Sciences on a possible cure for Covid-19, while sentiment was also boosted by strong earnings reports from Boeing and Google’s parent group Alphabet Alphabet.
The Dow Jones industrial average rose 388.82 points, or 1.61% to 24490.37 points, and the S&P 500 index increased by 59.47 points or 2.08% to record 2922.86 points, and the Nasdaq Composite Index advanced 194.97 points, or 2.27% to 8,802.70 points, according to “Reuters”.
The decade of American economic expansion ended in the first quarter, with gross domestic product shrinking by 4.8% due to the outbreak of the Corona virus, according to government data released on Wednesday.
The Commerce Department stated that this is the largest drop in GDP in 12 years.
The epidemic forced US companies to shut down and halt purchases and investment.
But the report in the quarter from January to March indicated that it could not determine the full economic effects of the dangerous virus, according to “AFP.”
The US economy shrank in the first quarter of the year at its fastest pace since the Great Depression, at a time when strict measures to slow the outbreak of the newly created Corona virus almost completely shut down the country, stopping the longest continuous growth wave in the country’s history, according to “Reuters”.
The drop in GDP came due to a slowdown in economic activity in the last two weeks of March, when they witnessed millions of Americans applying for unemployment benefits.
The Commerce Department’s reading of gross domestic product in the first quarter on Wednesday reinforced analysts’ expectations that the economy was already mired in a deep recession.
GDP fell 4.8% year on year in the last quarter, affected by a sharp drop in consumer spending and a reduction in corporate stocks. This is the fastest rate of contraction of GDP since the fourth quarter of 2008. Another key factor in the contraction is the decline in corporate investment, which, among other factors, overshadowed positive news from lower import bill, the housing market and increased government spending.
Economists polled by Reuters had expected a 4 percent drop in gross domestic product in the last quarter, but the range of decline in the estimate was at a pace of 15 percent. The economy grew 2.1% in the fourth quarter of 2019.
Consumer spending, which contributes to more than two-thirds of US economic activity, fell 7.6% in the first quarter, the largest decline since the fourth quarter of 1980, as demand for goods and services alike plummeted. And consumer spending grew 1.8% between October and December.