'A Drug Can Block This Virus'

By Alex Eule |  Wednesday, April 29

Health Comes First. Jerome Powell's news conferences usually count as the most important remarks of the day for investors. On Wednesday, though, the Federal Reserve chairman was easily overshadowed. During a White House event, Anthony Fauci told reporters that a potential Covid-19 treatment from Gilead Sciences "has a clear-cut, significant positive effect in diminishing the time to recovery."

Fauci, the head of the National Institute of Allergy and Infectious Diseases, was expanding on the positive news released earlier in the day by Gilead. The company said its drug remdesivir was shortening recovery times for Covid-19 patients in trials. 

By the time Jerome Powell spoke at 2:30 p.m. ET, the S&P 500 was already up 2.7%. His remarks did little to change the market's direction, despite their clear support for ongoing accommodative policies. While leaving interest rates unchanged at 0% to 0.25%, Powell said, "We will continue to use our tools to assure that the recovery, when it comes, will be as robust as possible."

But for now, the Fed's toolbox hardly matters. Investors -- and everyone else -- are more interested in efforts from the medical community. On that front, Wednesday was a good day. In his White House comments, Fauci said remdesivir's initial success carried a crucial message: "What it has proven is that a drug can block this virus."  

That's the news we've been waiting to hear since coronavirus began taking lives and shutting down economies across the globe. If a treatment can reduce the deadliness of Covid-19, it would change the equation for reopening the economy and restore some sense of normalcy in the coming months. 

But the reality of the situation isn't going to change overnight -- and the next reminder is on its way first thing tomorrow, when the U.S. Labor Department announces the next round of weekly jobless numbers. Economists are forecasting another 3.3 million unemployment claims, on top of the 26 million we've already seen since the Covid-19 shutdowns began.