By Yasin Ebrahim
Investing.com - Wall Street extended its gains on Wednesday on positive news about a potential therapy to treat Covid-19 patients and growing hopes of further stimulus ahead after Federal Reserve Chairman's Jerome Powell suggested the central bank and Congress will need to do more to keep to support an eventual economic recovery.
The Dow Jones Industrial Average rose 2.41%, the S&P 500 added 2.88%, while the Nasdaq Composite gained 3.69%.
"It may well be the case that the economy will need more support from all of us if the recovery is to be a robust one," Powell said, following the Fed's indication it will keep its benchmark rate within a 0% to 0.25% range.
"The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the Fed said Wednesday.
Many have attributed the central bank’s efforts to prop up the economy to the recent surge in the broader market since the March 23 low.
Gilead Sciences (NASDAQ:GILD) said a clinical trial evaluating its drug remdesivir in coronavirus patients had met its primary goal, sending its shares nearly 7% higher.
“The study demonstrates the potential for some patients to be treated with a 5-day regimen, which could significantly expand the number of patients who could be treated with our current supply of remdesivir,” Gilead Chief Medical Officer Merdad Parsey said in a statement.
Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said he was told data from the trial showed a “clear cut positive effect in diminishing time to recover.”
The positive news on the potential coronavirus treatment overshadowed data showing U.S. economic growth contracted at an annual rate of 4.8% in first quarter of the year.
FAANG stocks, meanwhile, clawed back some of their losses from a day earlier after Google-parent Alphabet (NASDAQ:GOOGL) reported earnings that were better than feared. Facebook (NASDAQ:FB), which is set to report after the closing bell, was up about 6%, while Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) were up more 2%.
Energy, meanwhile, also supported the broader market rally, underpinned by a jump in oil prices owing to a smaller-than-expected bid in weekly U.S. crude inventories.
On the earnings front, meanwhile, investors digested mixed quarterly results from corporates.
General Electric (NYSE:GE) was down 2% after reported quarterly revenue above forecasts, but earnings of 5 cents per share missed estimates of 8 cents a share.
Toymaker Hasbro (NASDAQ:HAS) reported quarterly results that just missed Wall Street estimates and warned it expected the coronavirus to hurt its sales of its toys and games in the second quarter.
Yum! Brands (NYSE:YUM) was down 1.7% after it reported that earnings plunged 68% from a year earlier, with same-store sales down 7% during the quarter as the Covid-19 pandemic forced many restaurants to shutter.