Market Snapshot: Dow surges more than 300 points as investors await Fed decision and track earnings deluge

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U.S. stock-index futures pointed to a sharply higher start on Wednesday as reports that a drugmaker’s clinical trial for a COVID-19 treatment had met its main goal helped to offset dismal first-quarter gross domestic product data.

Investors will also look forward to the outcome of a two-day Federal Reserve policy meeting, as first-quarter earnings continue to flow in.

What are major indexes doing?

Futures on the Dow Jones Industrial Average YM00, +1.60% rose 341 points, or 1.4%, to 24,386, while S&P 500 futures ES00, +1.53% were up 38.05 points, or 1.3%, at 2,905.25. Nasdaq-100 futures NQ00, +1.54% added 123 points, or 1.4%, to trade at 8,842.75.

Stocks gave up early gains Tuesday to end lower, with the Dow DJIA, -0.13% snapping a four-day winning streak to close at 24,101.55, down 32.23 points, or 0.1%. The S&P 500 SPX, -0.52% lost 15.09 points, or 0.5%, to close at 2,863.39, while the Nasdaq Composite COMP, -1.40% settled at 8,607.73, down 122.43 points, or 1.4%.

What’s driving the market?

Gilead Sciences Inc.said Wednesday morning that a government-run clinical trial evaluating its experimental drug remdesivir in certain COVID-19 patients met the study’s main goal. The announcement stirred hopes that pharmaceutical firms were making progress towards a treatment of the COVID-19 disease, but investors are still awaiting on further details from the study.

The potential for a cure for the coronavirus outweighed the bearish impact of a sharp slump in U.S. economic growth in the first quarter, gross domestic product shrinking by 4.8% on an annualized basis.

See: GDP sinks 4.8% in the first quarter – biggest drop since 2008 and worst is yet to come

Economists surveyed by MarketWatch, on average, were looking for a 3.9% fall in GDP after a 2.1% expansion in the fourth quarter. The first-quarter decline is expected to be only a foretaste of the economic carnage caused by the pandemic lockdowns in the current quarter.

The Fed will also draw some attention, but few analysts expect the central bank to take new action after a series of emergency measures since March in response to the coronavirus crisis. The Fed has cuts its policy interest rate to nearly zero, unleashed an unlimited bond-buying program, and moved to backstop loans to Main Street to ensure financial markets continue to function.

Read:Here’s the latest on the Fed’s actions to keep credit flowing to the U.S. economy

“With the Fed having already cut rates by one percentage point in March, the question is whether there is much left to do on that front. The decision to pledge $4 trillion to funding to the financial system also highlights a willingness to go over and above what any other central bank is doing,” said Joshua Mahony, senior market analyst at IG, in a note.

The Fed will conclude its two-day meeting with a statement, due at 2 p.m. Eastern, followed a half-hour later by Chairman Jerome Powell’s virtual news conference.

Economists expect the Fed’s message to be aimed at reassuring investors and the public that it has the largest economic downturn since the Great Depression under control. Since the beginning of March, the Fed has cut interest rates to zero and increased the assets on its balance sheet by more than $2 trillion since the beginning of the crisis to a record $6.6 trillion.

Check out:The Fed has a simple goal this week — project confidence in the face of the unknown

Before Tuesday’s pullback in stocks, gains this week were attributed to optimism over efforts by European countries and some U.S. states to begin easing up on lockdowns aimed at slowing the spread of COVID-19, though worries linger that a push to lift restrictions too quickly could see the number of cases reaccelerate.

The global case tally climbed to 3.13 million on Wednesday, according to data aggregated by Johns Hopkins University. The death toll rose to 217,555. At least 935,308 people have recovered. The U.S. has the highest case toll at 1.01 million and the highest death toll at 58,355.

Investors were sifting through another deluge of first-quarter earnings reports.

Which companies are in focus?
  • Gilead Sciences Inc. GILD, -1.53% said the trial of its remdesivir drug treatment for COVID-19 met its main goal, and said the National Institute and Infectious Diseases will provide details at an upcoming meeting. The pharmaceutical company’s stock was halted in premarket trading.
  • Google parent Alphabet Inc. GOOG, -3.30% GOOGL, -3.01% delivered first-quarter results after the closing bell Wednesday, with earnings suffering from a “significant slowdown” in ad sales, though revenues topped expectations. Shares were up more than 8% in premarket action. Opinion: Google gives Wall Street what it wants, and the stock shoots higher
  • Dow component Boeing Inc. BA, +2.03%  rose 4.7% in off-hours after it reported free cash flow was better than forecast, but missed first-quarter revenue and earnings expectations. It also said commercial airplanes fell less than expected.
  • Shares of chip maker Advanced Micro Devices Inc. AMD, -1.73% were 2.1% lower ahead of the opening bell, after the company late Wednesday said the COVID-19 pandemic would trim its growth in 2020. First Take:AMD has only one question still lingering about COVID-19 effects
  • Starbucks Corp. SBUX, +1.22% shares declined 0.3% in premarket trade after the coffee-chain giant fell short of earnings expectations that had already been trimmed due to worries about the effect of the pandemic on sales.
  • Shares of Ford Motor Co. F, +4.06% were down 2.5% premarket after the auto maker reported a wider-than-expected first-quarter loss of $2 billion, or 50 cents a share, and missed sales expectations as the coronavirus outbreak continues to eliminate demand for cars, and trucks and keeps factories closed.
  • General Electric Co. GE, +5.75% shares were off 3.2% in premarket trading, after the industrial conglomerate reported first-quarter adjusted profit and free cash flow expectations that came in below estimates but topped revenue forecasts. The company said it cut 700 jobs in its power division in the first-quarter.
  • Shares of Mastercard Inc. MA, -0.19% were down slightly in premarket despite topping earnings and revenue expectations for its first quarter
How are other markets trading?

Crude prices recovered slightly, but still remain at depressed levels. West Texas Intermediate oil for June delivery CLM20, +19.53% rose $2.06, or 17%, to $14.40 a barrel, on the New York Mercantile Exchange. Gold for June delivery GCM20, -0.27% was up $3.40, or 0.2%, to 1,725.60 an ounce.

The 10-year Treasury note yield TMUBMUSD10Y, 0.608% fell 1.6 basis points to 0.594%, Tradeweb data show. Bond prices move in the opposite direction of yields.

In overseas equities, the STOXX Europe 600 index SXXP, +0.77% was trading flat. China’s benchmark CSI 000300, +0.46% index and Hong Kong’s Hang Seng index HSI, +0.27% posted slight gains. Japanese exchanges were closed in observance of the Golden Week holiday.