Stocks fell in choppy trading Friday as traders digested news about a potential coronavirus treatment as well as another record spike in virus cases.
The Dow Jones Industrial Average traded 49 points lower, or 0.2%. The S&P 500 dipped 0.5%. The Nasdaq Composite lagged, falling 0.9%.
Gilead Sciences said its coronavirus treatment candidate, remdesivir, “was associated with an improvement in clinical recovery and a 62 percent reduction in the risk of mortality compared with standard of care.” The news sent Gilead shares up more than 1%.
BioNTech’s CEO also told The Wall Street Journal the company’s coronavirus vaccine candidate could be ready for approval by December. The company’s U.S.-listed shares rose 4%.
The news led to a rotation out of major tech stocks and into companies that would benefit from the economy reopening. Facebook, Amazon, Alphabet, Apple and Microsoft were all lower. Delta Air Lines, United and American all gained at least 1%. Bank shares such as JPMorgan Chase and Citigroup rose 2.1% and 1.8%, respectively.
Gilead and BioNTech’s comments came after the U.S. reported more than 63,000 additional coronavirus cases, a record. The country’s seven-day average now stands at more than 53,000 cases.
“For the US, the outlook is bleak – the COVID crisis continues to metastasize as transmissions stay elevated while hospitalizations and fatalities rise too,” said Adam Crisafulli of Vital Knowledge, in a note. “While US bulls hang on to “Amazon, a vaccine, and the Fed” and those three items will prevent a steep decline, it’s very hard to look at the SPX and find it near-term compelling.”
Investors have flocked into mega-cap tech names such as Amazon, Microsoft, Netflix and Apple amid fears this latest resurgence in coronavirus could lead to people staying home for longer. All four of these stocks are trading at, or near all-time highs. They are also up at least 3.9% each week to date.
Wall Street was coming off a bifurcated session, in which major tech stocks led the Nasdaq to a record high while the Dow and S&P 500 struggled.
This divergence between tech and the rest of the market came as coronavirus-related hospitalizations hit a record in Florida. In California, the state’s daily average increase of coronavirus cases rose to a record, as well.
“The path forward for the economy will likely hinge on the amount of financial scarring that occurs in the months ahead and degree of consumer engagement as coronavirus concerns fluctuate,” wrote Bruce Bittles, chief investment strategist at Baird. “High levels of initial jobless claims and evidence that small businesses are closing are sobering reminders of the economic challenges that lie ahead.”
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