The stock market was off to a good start yesterday, with the Dow Jones Industrial Average trading as much as 400 points higher before news broke that Gilead Sciences malaria drug Remdesivir didn’t help speed the recovery of coronavirus patients during a clinical trial in China.
The Dow closed the day up 39 points, with the S&P 500 closing down just over one point and the Nasdaq losing less than a point.
Many had hoped Remdesivir would offer treatment against the coronavirus. This includes President Trump, who just last month mentioned that the drug “seems to have a very good result.”
Gilead (Nasdaq: GILD) shares dropped 4.34% after the Financial Times reported the failed clinical trial, citing a report on the World Health Organization’s website.
A spokesperson for the WHO confirmed that the report was shared early and taken down.
Not Giving Up Yet
However, Jim Cramer, host of Mad Money, said in a series of tweets that we should wait until the results of a U.S. clinical trial are in before we write off the drug’s potential.
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“I say wait until the American studies come out. University of Chicago study is a lot more rigorous. I would stick with that. You don’t have to believe it. But this is the third time the Chinese have said the drug doesn’t work.”
He added in a separate tweet “This will be the last time I mention remdesivir again. Do you trust the University of Chicago Med School doing a real study, or the Chinese doing a fake one? All your call.”
Also dragging down the markets were the latest initial jobless claims report and new home sales for March.
The initial jobless claims report showed that another 4.4 million Americans filed for benefits last week.
That brings the five-week total to more than 26 million Americans filing for unemployment benefits. We’ve now seen job losses officially exceed the 22.4 million jobs created in the 11 years since the country started coming out of the Great Recession.
New home sales in March fell 15.4% to a seasonally-adjusted level of 627,000 units. That’s the lowest level of new home sales since July 2013. Additionally, the median sales price slipped from $330,100 down to $321,400.
A Ray of Light
Surprisingly, the lone bright spot yesterday in the markets was oil, which lately has been anything but a bright spot.
The price of West Texas Intermediate crude jumped 20% yesterday to close at $16.50 per barrel. This followed a similar gain on Wednesday. Since Tuesday’s low of $11.57 per barrel, oil has gained 42%.
Prices got a boost from a tweet by President Trump which stated: “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”
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The tweet is referencing a report from the Pentagon claiming that ships from Iran’s Islamic Revolutionary Guard Corps Navy took “dangerous and provocative” actions near U.S. Navy and Coast Guard ships in the Persian Gulf.
Oil is still down nearly 70% for the year, and inventories are expected to continue building for the next 4-6 weeks, meaning this rally could be short-lived.