| Stocks Soar On Positive News For Virus Treatment, Earnings, And Reopening Economy  Image: Bigstock Stocks soared yesterday on encouraging test results for a treatment on the coronavirus.
Reports that Gilead's drug Remdesivir performed well in a controlled study lifted the market. That news was cheered as it gets us one step closer to beating the virus. And it will eventually give those who may be apprehensive of going back outside the added confidence to go out in public and resume their normal lives.
The results were especially sweet after the World Health Organization (WHO) last week 'accidentally' published a flawed Chinese study claiming the drug failed. Gilead said that the WHO's accidental post included "inappropriate characterizations of the study." And the WHO apologized afterwards. But I remarked at the time that it felt like somebody was trying to manipulate the stock. I'm even more convinced of that now.
Either way, glad the good news came out. That lifted the stock, and people's spirits too.
Let me also note that in addition to Gilead's drug trials, there's currently 72 other trials of different therapeutics going on right now, and 211 trials that are in the planning stages. So the race is on for a cure. And sooner or later, we'll get one (or a few).
Stocks also climbed on earnings optimism. Google jumped nearly 9% yesterday after reporting better than expected top line results the day before. That optimism spilled over to upcoming earnings. And that was not misplaced. After the close yesterday, the market applauded Microsoft's results, Tesla's results, and Facebook's results with each one up 3.5%, 9.9%, and 10.2% respectively in after-hours trade. And that was on top of the stellar gains they had in the regular session leading up to it.
Today we'll get results from Twitter (before the market opens), Amazon (after the close), and Apple (after the close).
The market also liked what it heard from the Fed. They pledged to keep interest rates near zero until the economy gets back to full employment and inflation returns. And they will continue to buy Treasuries and mortgage-backed securities until they reach their price stability goals.
Yesterday morning's Q1 GDP report showing the economy contracted by -4.8% was quickly dismissed as 'old news.' Everybody knew it was going to be bad. And it was. But as I've said before, the market is forward looking, and the focus has shifted to reopening our economy. And when America gets back to work, the new numbers will look nothing like what we saw at our worst.
That's why stocks have been soaring.
And even though we've seen a spectacular rally so far, it looks like there's a lot more upside to go.
A lot of the stocks people bought in the last few weeks at bargain basement prices will likely turn out to be long-term holds. Especially if they were combined with strong fundamentals.
And there's nothing like sitting back and watching the gains rack up. But too many long-term investors see their hopes dashed when their once promising investment turns sour and they scramble to cut losses.
Don't be that person.
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Best, 
Kevin Matras Executive Vice President, Zacks Investment Research | Most Popular Articles from Zacks.com | 
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