Optimism Spreads

By Alex Eule |  Monday, April 27

No Fear. Stocks have been going up for weeks, but today's trading suggested that investors have reached a new level of optimism, as the economy begins to reopen in some parts of the country. 

The Cboe Volatility Index, or VIX, also known as the "fear gauge," fell to its lowest level since early March. Economically sensitive small-cap stocks rallied, with the Russell 2000 up 4%. The large-cap S&P 500 rose 1.5%, led by previously hard-hit stocks, including retailers Kohl's, Nordstrom, Gap, and L Brands. Meanwhile, the Dow Jones Industrial Average, up 1.5%, rose for its fourth-consecutive day, the index's longest winning streak since early February. 

The Dow, S&P 500, and Nasdaq are each up at least 10% in April, putting all three indexes on track for their first monthly gain of 2020.

So what could go wrong? Well, we're just a few days from the next report on jobless claims. And there are signs that small employers are still desperately trying to access funds in the Paycheck Protection Program.  New efforts to restart PPP continue to be hit with delays and technical glitches. Congress has now allocated a total of $660 billion worth of small-business loans, but banks administering the loans say the PPP platform has been overwhelmed with demand.

Barron's has written about PPP's quirks and why some of the small-business funds have ended up with big companies. 

On the virus front, the treatment news remains mixed. There could be new data on Gilead Sciences' much-watched remdesivir drug by the end of this week -- one analyst still downgraded Gilead's stock today -- while a consortium of companies working toward a vaccine said one could be available to some people before the end of the year. 

But another promising treatment -- Kevzara, an arthritis drug from Sanofi and Regeneron Pharmaceuticals -- had no notable benefit in a Phase 2 trial of Covid-19 patients, the companies said. Here's an update from Josh Nathan-Kazis  on nine of the most important experimental Covid-19 drugs.

Amid the day's optimism, there was one outlier: West Texas Intermediate crude tumbled 25%, the latest in a series of brutal collapses for oil, which continues to deal with falling demand and excess supply that has nowhere to go.