The novel coronavirus outbreak has put the global economy on hold. America has been hit hard by COVID-19 as evident from the surge in unemployment claims in recent weeks, making President Trump desperate to kickstart the economic engine once again.
Trump’s desperation seems to have sparked a recovery in the Dow Jones Industrial Average (DJIA) over the past month. And now, the latest news about remdesivir being a potential coronavirus treatment has sent the stock market soaring.
It has emerged that pharma giant Gilead Sciences’ experimental drug ‘remdesivir’ is improving the condition of COVID-19 patients. Medical news website STAT reports that severe COVID-19 patients who are being treated with the drug at a University of Chicago hospital are showing rapid recoveries.
What’s more, nearly all the tested patients are being discharged in just a week. The news has been enough to send the Dow Jones markedly higher.
Stock market futures skyrocketed overnight, and the Dow Jones Industrial Average (DJIA) opened to spectacular gains.
As of 9:38 am ET, the Dow had gained 525.84 points or 2.23% to trade at 24,063.52.
The S&P 500 rose 1.76%, and the Nasdaq ticked 0.81% higher to round out a bullish session on Wall Street.
Shares of Gilead Sciences are up over 10% thanks to its potential breakthrough in novel coronavirus treatment.
This early action suggests that the stock market will end the week on a terrific high and extend its recent recovery.
While initial trials of a potential novel coronavirus drug seem promising enough to send the Dow into a frenzy, there are a few limitations that should be kept in mind. For one, the University of Chicago recruited 125 COVID-19 positive people for the clinical trials of the antiviral drug remdesivir. STAT reports that 113 of them had severe symptoms of the disease.
The sample size isn’t large enough to prove that remdesivir is an effective treatment for the novel coronavirus. Wall Street needs to keep in mind that other trials of the drug are underway. Gilead is waiting for data from those trials, so a conclusive call about the effectiveness of remdesivir will have to wait until we have more results.
Matt Maley of asset management firm Miller Tabak had his reservations about the experimental drug, telling CNBC that:
This is obviously good news. Of course, we’ve heard a few other pieces of good news like this recently and they didn’t pan-out as well as people had hoped.
So, the Dow and the broader stock market need to take the results of just one trial with a pinch of salt. Unfavorable results elsewhere may dent the effectiveness of remdesivir as a treatment for the novel coronavirus, as conclusive results won’t be available until reports of the full trial come to light.
But those who have taken remdesivir to treat COVID-19 have hailed the “miraculous” properties of the drug. STAT cites the example of Slawomir Michalak. The 57-year-old factory worker from a west Chicago suburb had severe COVID-19 symptoms such as a fever of 104 and shortness of breath. He went to the Chicago hospital on April 3 and agreed to be a part of the remdesivir trial.
After his first dosage of the drug on April 4, Michalak claims that his fever “dropped almost immediately” and he started feeling better. If such reports emerge from the other trials under progress, then the drug may act as a catalyst for restarting the U.S. economy and help the Dow sustain its recovery.
Tom Lee of Fundstrat Global Advisors points out:
An effective treatment is a huge deal and would create a path to open the economy and resume normal ‘social activities’ way sooner than a vaccine. A treatment is safer and more scalable because it is only given to people who need to be treated.
So, the Dow and the broader stock market will keep its fingers crossed and hope that Gilead’s remdesivir lives up to its promise of being a novel coronavirus treatment.
Last modified: June 24, 2020 1:03 AM UTC