Friday July 10th

10-07-2020

Stock futures cut losses after Gilead says Covid treatment candidate sharply reduces mortality risk

U.S. stock index futures were off their lows Friday after Gilead Sciences said remdesivir showed a sharp mortality risk drop when used to treat patients suffering of coronavirus. Dow Jones Industrial Average futures were down just 43 points, or 0.2%, after implying a loss of more than 100 points earlier in the session. S&P 500 and Nasdaq-100 futures also clawed back most of their earlier losses, trading lower by 0.1% each. Gilead said in a statement that remdesivir “was associated with an improvement in clinical recovery and a 62 percent reduction in the risk of mortality compared with standard of care.” The news sent Gilead shares up more than 2% in the premarket. Wall Street was coming off a wild session in which investors flocked into mega-cap tech names amid growing uncertainty around the coronavirus. The Nasdaq Composite closed at an all-time high Thursday as Amazon jumped 3% to a record. Microsoft, Apple and Netflix were also higher. But the rest of the market struggled. The Dow dropped more than 300 points, erasing its week-to-date gains. The S&P 500 dipped 0.6%. “It was a relatively quiet session, yet a roller coaster ride nonetheless,” said Frank Cappelleri, executive director at Instinet, in a note to clients. He also pointed out the S&P 500 fell 2% from its session high to its low of the day before regaining some of those losses. “Overall, breadth was quite negative, though … the SPX’s five biggest stocks advanced” but 392 stocks in the index all declined. This divergence between tech and the rest of the market came as coronavirus-related hospitalizations hit a record in Florida. In California, the state’s daily average increase of coronavirus cases rose to a record, as well. The virus resurgence raised questions about the health of the economy moving forward, pressuring companies that would benefit from an economic recovery. Airlines such as United, Delta and American all closed lower on Thursday. Cruise operators Carnival and Norwegian Cruise Line also fell. “The path forward for the economy will likely hinge on the amount of financial scarring that occurs in the months ahead and degree of consumer engagement as coronavirus concerns fluctuate,” wrote Bruce Bittles, chief investment strategist at Baird. “High levels of initial jobless claims and evidence that small businesses are closing are sobering reminders of the economic challenges that lie ahead.” The Dow will limp into Friday’s session with a 0.5% loss for the week. The S&P 500 pared some of its weekly gains, but is still up 0.7% in that time period. The Nasdaq, meanwhile, was on pace for its third weekly gain in four weeks. Asia Pacific markets fell across the board Friday as investors remained cautious due to the growing number of coronavirus cases around the world. Hong Kong’s Hang Seng Index fell 2.26% in late-afternoon trade. Reuters reported the city will suspend all schools from Monday following a recent spike in coronavirus cases. The Nikkei 225 in Japan dropped 1.06% to 22,290.81 while the Topix index fell 1.42% to 1,535.20. In South Korea, the Kospi index was down 0.81% at 2,150.25. Mainland Chinese markets also fell: The Shanghai composite was down 1.95% at 3,383.32, the Shenzhen composite was down 0.3% at 2,251 while the Shenzhen component was down 0.61% at 13,671.24. Oil prices dropped on Friday and were headed for weekly declines as inventories rose and record-breaking new coronavirus cases in the United States stoked concern about the pace of economic recovery and fuel demand. Brent crude was down by 46 cents, or 1.1%, at $41.89 a barrel, and U.S. oil fell 51 cents, or 1.3%, to $39.11 a barrel. Brent was set for a weekly decline of almost 2% and U.S. crude for a fall of almost 4%. Gold rose on Friday and held above the key $1,800 level en route to a fifth straight weekly gain as surging U.S. COVID-19 infections underpinned demand for safe-haven assets. Spot gold prices rose 0.2% to $1,805.84 per ounce, and were up about 1.8% for the week, having soared to their highest since October 2011 at $1,817.71 on Wednesday. U.S. gold futures rose 0.5% to $1,812.10 per ounce.