(Reuters) – Investors are pinning their hopes for the reopening of the U.S. economy on the potential for wider availability of testing for COVID-19 cases and on drug trials for treatments of the deadly disease but said, until there is concrete progress in these areas, further stock market gains may be limited.
Much of the S&P 500’s .SPX> almost 27% advance above its March 23 low has been due to hopes that massive U.S. fiscal and monetary support would dampen the economic blow from stay-at-home orders designed to contain the coronavirus pandemic.
But recently, the index has reacted to reports about trials and in particular Gilead Science’s remdesivir experimental treatment for COVID-19, the respiratory illness caused by the new coronavirus. Remdesivir, which previously failed as a treatment for Ebola, is designed to keep a virus from replicating and overwhelming a patient’s immune system.
This volatility highlights investor impatience for indications of when state and Federal authorities might start to ease stay-at-home orders and get people back to work.
So far there are no approved treatments or vaccines for the disease which has killed over 190,000 people globally, according to a Reuters tally. The disease has infected more than 928,000 people and killed more than 52,000 in the United States alone, according to the latest data from the U.S. Centers for Disease Control and Prevention.
“Any sentiment around a therapy is really moving markets because it shapes expectations for a return to normalcy which would be needed to get an economic recovery started,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.
The S&P added to gains on Friday after the lead investigator in a U.S. government trial of remdesivir told Reuters the trial may yield results as early as mid-May.
But on Thursday the index temporarily pared gains after a report Gilead’s drug failed a trial the drugmaker itself deemed inconclusive because the study was ended early. On April 17 investors were encouraged after medical news publication STAT reported rapid improvements in COVID-19 patients in one hospital studying the drug.
While Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut is encouraged by the number of researchers working on coronavirus treatments, he is cautious about the stock market’s near-term prospects.
“The only thing that pushes us above this range in a sustainable way is a therapeutic solution or a vaccine that allows us to return to the pre-crisis level of business,” he said. “I think we’ll get a medical solution. The big question is the time frame. The longer it takes it becomes harder (for the economy) to snap back and rebound.”
While there are more than 70 vaccines in development for coronavirus, Manulife Investment Management’s Steven Slaughter, who manages a roughly $3.5 billion dedicated healthcare fund said he expects development of a successful vaccine to take at least 12-18 months compared to the average vaccine development time of 5-7 years.
Then it could be years before pharmaceutical companies can produce enough to vaccinate the world’s entire population.
But Slaughter is optimistic at least some treatment will be validated in trials in the next three to six months, and said this would give officials “more latitude to restart the economy.”
He said there are four main types of treatments being tested by companies including Gilead, Takeda Pharmaceutical 4502.T>, Regeneron Pharmaceuticals and Alexion Pharmaceuticals that all hold some promise.
While treatments may not necessarily slow transmission of the disease, they could help doctors control the severity of infections, easing pressure on intensive care units (ICU).
“If we can take a patient that otherwise would’ve spend 2-3 weeks in an ICU bed out of that ICU bed in 2-3 days that has an enormous beneficial impact on our ability to handle outbreaks or to handle a potential second wave of infections,” he said.
In the meantime officials should at least look for greater availability of tests that can detect virus infections and for ways to track and trace people who might have been exposed, before easing lockdowns, some strategists said.
“What will be more critical will be the testing capacity and the efficacy of track and trace programmes,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management. Test developers include Abbott Laboratories and Roche Holding .
Since much of the U.S. population has been told to stay at home and many businesses have been on pause since the middle of March, investors have already accounted for dismal earnings and a massive U.S. economic decline in the second quarter.
But recent S&P gains seem to imply a huge improvement in the economy in the third quarter, according to Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“There will be a vaccine and treatments for COVID-19 but people are underestimating the amount of time it takes for them to reach the market,” said Tuz. “If there are disappointments in three areas – vaccine, treatment and testing – we could back track some in the market.”
(Reporting by Sinéad Carew in New York; Additional reporting by Sujata Rao-Coverly and Tommy Reggiori Wilkes in London; Editing by Alden Bentley)
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
OTTAWA – The economy added 47,000 jobs in September, while the unemployment rate declined for the first time since January to 6.5 per cent, Statistics Canada reported on Friday.
The agency says youth and women aged 25 to 54 drove employment gains last month, while full-time employment saw its largest gain since May 2022.
The overall job gains followed four consecutive months of little change, the agency said.
The unemployment rate has been steadily climbing over the past year and a half, hitting 6.6 per cent in August.
Inflation that month was two per cent, the lowest level in more than three years as lower gas prices helped it hit the Bank of Canada’s inflation target.
The central bank has cut its key interest rate three times this year, and is widely expected to keep cutting as inflation has subsided and the broader trend points to a weakening in the labour market.
Despite the job gains in September, the employment rate was lower in the month, reflecting continued growth in Canada’s population.
Statistics Canada said since the employment rate saw its most recent peak at 62.4 per cent in January and February 2023, it’s been following a downward trend as population growth has outpaced employment growth.
On a year-over-year basis, employment was up by 1.5 per cent in September, while the population aged 15 and older in the Labour Force Survey grew 3.6 per cent.
The information, culture and recreation industry saw employment rise 2.6 per cent between August and September, after seven months of little change, Statistics Canada said, with the increase concentrated in Quebec.
The wholesale and retail trade industry saw its first increase since January at 0.8 per cent, while employment in professional, scientific and technical services was up 1.1 per cent.
Average hourly wages among employees rose 4.6 per cent year-over-year to $35.59, a slowdown from the five-per-cent increase in August.
The unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September and was significantly higher than the unemployment rate for people who were not racialized and not Indigenous.
Black Canadians in that age group saw their unemployment rate rise to 11 per cent last month while for South Asian Canadians it was 7.3 per cent. For non-racialized, non-Indigenous people, it rose to 4.4 per cent.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
