Stocks surge on Gilead’s coronavirus drug and Fed’s pledge to keep rates near zero

NEW YORK - U.S. equity markets rallied on Wednesday as Fed Chair Powell promised to use more tools to aid the economic recovery while keeping interest rates near zero for the foreseeable future. This helped offset a larger-than-expected drop in first-quarter gross domestic product.

The Dow Jones Industrial Average gained 532 points, or 2.21 percent, while the S&P 500 and the Nasdaq Composite rose 2.66 percent and 3.57 percent, respectively.

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Additionally, there was more positive news on the potential coronavirus treatment from drugmaker Gilead Sciences remdesivir and reports followed that an approval from the FDA could be imminent, per the New York Times. The stock jumped over 5 percent.

On the economic front, the U.S. economy contracted 4.8 percent in the first quarter, according to an advanced reading from the Commerce Department, outstripping the 4 percent drop that economists surveyed by Refinitiv were expecting. The negative print was the first in six years and the biggest since the financial crisis.

Meanwhile, earnings season continued with Dow component Boeing and a number of other high-profile companies releasing their quarterly results.

Boeing reported a first-quarter loss of $641 million as COVID-19 and the grounding of the 737 MAX eroded sales. The aerospace giant expects to begin production of the 737 MAX at low rates in 2020 before ramping up to 31 per month in 2021.

Revenue at Alphabet jumped 13 percent year-over-year as “stay-at-home” orders drove traffic to Google, YouTube and cloud-based services. While Google’s advertising business was strong in January and February, there was a sharp slowdown in March as the virus’ outbreak forced the delay of ad campaigns.

Starbucks reported second-quarter profit fell 50 percent from a year ago as COVID-19 forced the coffee chain to limit operations around the world. Same-store sales slipped 3 percent in the U.S. and 10 percent globally. Comparable sales in China tumbled 50 percent, though most of those stores have since reopened.

General Electric said first-quarter profit spiked 73 percent despite COVID-19 causing a “dramatic decline” in its commercial aerospace business. GE warned results in the April-through-June period will see a sequential decline due to the virus.

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Elsewhere, Uber announced chief technology officer Thuan Pham will step down effective May 16. The news comes amid a report the company is considering cutting 20 percent of its workforce as COVID-19 crushes demand for the service.

The rental-car company Hertz missed lease payments and is preparing for a possible bankruptcy filing, people familiar with the matter told The Wall Street Journal.

Facebook, Microsoft and Tesla are among the names reporting after the closing bell.

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Looking at commodities, West Texas Intermediate crude oil surged 22 percent to $15.06 a barrel after an inventory report from the Energy Information Administration showed stockpiles grew by 8.99 million barrels, less than the 10.62 million build that was expected. A report from the American Petroleum Institute a day earlier showed the same trend.

Gold slipped 0.67 percent to $1,711 an ounce.

U.S. Treasurys were little changed with the yield on the 10-year note holding near 0.625 percent.

European markets were higher, with Britain’s FTSE up 2.63 percent, Germany’s DAX climbing 2.89 percent and France’s CAC advancing 2.22 percent.

In Asia, China’s Shanghai Composite gained 0.44 percent and Hong Kong’s Hang Seng added 0.28 percent while Japan’s Nikkei was closed for a holiday.

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