Trial by Fire

By Alex Eule |  Thursday, April 23

Trial by Fire. Last week, leaked data on a potential Covid-19 treatment from Gilead Sciences caused stocks to soar. Today, different data -- with a far less optimistic tone -- caused stocks to fall. 

The Dow Jones Industrial Average was up as much as 410 points, or 1.7%, this morning. But news of the latest Gilead data -- reported by the health-care news site Stat shortly before 1 p.m. -- caused the Dow to give up nearly all its gains. The index finished the day up 39 points. The impact on Gilead's stock was even greater. Shares of the drugmaker tumbled 4.3%.

Gilead pushed back on the news, saying that the leaked study "included inappropriate characterizations." The company added: “The study results are inconclusive, though trends in the data suggest a potential benefit for remdesivir, particularly among patients treated early in disease.” Josh Nathan-Kazis has more on what he calls a "bizarre sequence of events." 

At some point soon, Gilead will have actual data to release on remdesivir. It could be the most anticipated clinical trial of all time -- the results are likely to move markets across the globe. 

Meanwhile, there was important hard data out today -- on the continued economic impact of Covid-19. Another 4.4 million Americans filed unemployment claims in the past week, bringing the recent total of out-of-work Americans to 26 million. That's a staggering 16% of the U.S. workforce, writes Barron's Lisa Beilfuss.

That stocks initially rose on that news speaks to investors' obsessive hunt for a peak in Covid-19 pain. The new claims represent a decline from last week, when 5.2 million filed unemployment claims, and from the 6.6 million a week before that. But it's hard to feel good about this data. Some history from Lisa: 

For perspective, before the virus struck, just over a million workers applied for unemployment benefits in a typical five-week period. In the worst such span during the Great Recession, it was less than four million.

Energy investors -- a particularly downbeat group in recent months -- also think the worst may be over. Crude oil jumped 20% to $16.50 a barrel. It was the third straight day of gains for West Texas Intermediate, or WTI, futures. Again, though, it might be too soon for optimism. Here's Barron's Avi Salzman on this week's rally: 

The price of oil is likely to bounce around considerably in the days ahead, with percentage moves that look enormous given the low prices. In reality, producers can’t make money at these prices and won’t be able to generate cash even if they rise an additional 20%. Prices need to double for the industry to begin to climb back to health.

WTI is down 75% from a year ago.