U.S. stocks rally on hopes for coronavirus drug

U.S. stocks rallied to a seven-week high on better-than-estimated revenue for Google’s parent company and hopes for a coronavirus treatment. Oil surged.

The S&P 500 Index gained 2.7% in a broad advance, with four stocks up for every one that fell after Gilead Sciences said its experimental drug helped coronavirus patients recover faster. The Nasdaq compositeindex rose to within 1% of erasing losses for the year, led by Alphabet after it reported an ad-sales slowdown that wasn’t as bad as expected.

Oil futures rebounded after plunging 27% in two sessions. The dollar weakened.

Investors shrugged off warnings from the Federal Reserve that the ongoing public health crisis “poses considerable risks to the economic outlook over the medium term.” Data also showed the biggest contraction since 2008 in the first quarter as the world’s largest economy shrank at a 4.8% annualized pace.

Meanwhile, investors are weighing plans by countries around the world to restart activity, with hard-hit nations such as Spain saying they need at least eight more weeks to fully lift restrictions. Post-market earnings from megacaps such as Facebook will also give more insight into the impact of the outbreak.

“What’s really driving markets at this stage is any positive news of potential treatments and vaccines, because ultimately that is a game changer,” said Seema Shah, a global investment strategist for Principal Global Investors. “That’s what’s going to be pushing markets, plus anything with regards to the lockdown being lifted earlier.”

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