By Joe Wallace, Paul Vigna and Chong Koh Ping
U.S. stocks rose Wednesday on hopes of progress for a coronavirus treatment and as Federal Reserve Chairman Jerome Powell said the central bank is in no hurry to end its economic stimulus.
Major indexes opened sharply higher and maintained their gains into the final hour of trading. All 11 sectors of the S&P 500 rose, led by shares of beaten-down energy stocks.
The Dow Jones Industrial Average rose 520 points, or 2.2%. The S&P 500 gained 2.6%, and the Nasdaq Composite jumped 3.5%. All three indexes have surged in April after a punishing selloff when the pandemic brought the economy to a near halt.
"The market is pricing in an economic rebound later in the year," said Michael Arone, chief investment strategist at State Street Global Advisors, pointing to sectors like energy and financials that are rebounding after suffering steep losses.
Sentiment was boosted Wednesday by news from Gilead Sciences that a clinical trial evaluating its drug remdesivir in coronavirus patients had concluded with a positive result. Gilead share rose 6.7%.
The Gilead news, Mr. Arone said, may actually be the most important development on the day. "This is a health problem that requires a health solution," he said, and the market is going to jump on any signals that a solution is nearer.
Energy stocks were the best performing group in the S&P 500, up 5.7%. The sector has risen 31% this month, which would be its best month since at least 1994. It has climbed 18% over the past six sessions alone, helping to cut its losses for the year to 36%.
At the conclusion of its two-day policy meeting, the Federal Reserve didn't unveil any new programs, but the central bank did pledge lasting support for the economy.
"Let me just say we are going to not be in any hurry to withdraw these measures or lift off," Mr. Powell said. "We are going to wait until we are quite confident that the economy is well on the road to recovery" before backing off from support efforts,
After cutting interest rates to near zero in mid-March, the Fed began a torrent of bond-buying programs to stabilize markets, while offering support to other corners of the market to bolster the availability of credit. These measures have helped stocks stage a rapid recovery in the face of a deep recession.
Of all the things the Fed did Wednesday, the most important might be something it didn't say, according to Joseph Brusuelas, chief economist at consulting firm RSM.
Specifically, the Fed didn't "point to an exit or end point on its accommodative policies," he said. "The Fed is prepared to engage in an open-ended period of policy innovation to support the years it's going to take the economy to dig out."
But even an open-ended, multi-trillion rescue can't force a quick recovery, said Danielle DiMartino Booth, CEO and chief strategist of research firm Quill Intelligence. "Clarity about the Fed's commitment to bail out markets cannot equate to households feeling confident or having adequate funds to resume their prior spending habits," she said.
Data Wednesday showed that gross domestic product, a broad measure of the goods and services produced in an economy, fell 4.8% in the first quarter. The contraction is the steepest since the last recession.
In corporate news, shares of Alphabet climbed 9.7% after Google's parent company posted strong results for the first quarter. Revenue rose 13% from a year before, adding to indications that Silicon Valley might weather the slowdown better than others in the corporate world.
Shares of Facebook, due to report earnings after markets close Wednesday, rose 6.6%. Other blue-chip companies scheduled to report results include Microsoft, Qualcomm and Tesla.
General Electric shares fell 1.8% after the company said it was cutting $2 billion in costs to offset falling sales and profits. Boeing rose 7.2% after the aircraft manufacturer said it planned to cut jetliner production and 10% of its workforce.
Oil markets remained volatile. June futures contracts for West Texas Intermediate, the main U.S. bellwether, rose 22% to $15.06 a barrel.
Among European equities, shares of major banks were among the best performers. Deutsche Bank climbed 12% after its first-quarter results were better than expected, largely driven by an 18% jump in investment-banking revenue. Barclays rose 13% as its investment bank generated record quarterly revenue.
Asian stock benchmarks broadly rose. Australia's S&P/ASX 200 closed 1.5% higher, while the Shanghai Composite Index inched up 0.4%. Hong Kong's Hang Seng Index ticked up 0.3%. Japan's market was closed for a public holiday.
Write to Joe Wallace at Joe.Wallace@wsj.com, Paul Vigna at paul.vigna@wsj.com and Chong Koh Ping at chong.kohping@wsj.com
(END) Dow Jones Newswires
April 29, 2020 15:40 ET (19:40 GMT)
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