[New York Close] Oil Prices Rise 20% · Stock Market Mixed on Gilead Effect

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market showed strength fueled by rising oil prices but closed mixed due to reports that the effectiveness of the COVID-19 treatment was negative. The impact of new U.S. unemployment claims and economic indices was rather limited.

On the 23rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 39.44 points (0.17%) to 23,515.26, the S&P 500 index fell 1.51 points (0.05%) to 2,797.80, and the Nasdaq index dropped 0.63 points (0.01%) to 8,494.75.

That day, the New York stock market started strong, supported by a significant rise in international oil prices for the second consecutive day. West Texas Intermediate (WTI) June futures rose about 20% again from the previous day, reaching $16.5. The two-day increase was about 40%.

While the previous day’s rise was mainly driven by the possibility of conflict between the U.S. and Iran, that day’s increase was influenced by news that U.S. oil production cuts were being implemented in earnest. Authorities in Oklahoma, a major U.S. oil production area, began reviewing oilfield closures, and reports emerged that offshore oilfields in the Gulf of Mexico also started production cuts.

The U.S. Department of Labor announced that last week’s unemployment insurance claims decreased by 810,000 from the previous week to 4.42 million. This was not significantly different from market expectations, and there was an assessment that the worst situation had passed. Although about 26.5 million people lost their jobs over the past five weeks, the fact that weekly new unemployment claims dropped to the 4 million range was positive for investor sentiment.

The U.S. economy continued to plunge in April. According to IHS Markit, the preliminary seasonally adjusted U.S. manufacturing Purchasing Managers’ Index (PMI) for April was 36.9, down from the previous month’s final figure of 48.5. It was the lowest in the past 133 months but exceeded the market expectation of 35.0. The preliminary April services PMI sharply declined from 39.8 in the previous month to 27.0, falling short of the market expectation of 32.0.

The oil-driven tailwind faced a headwind in the afternoon due to negative reports about Gilead’s remdesivir, which had raised hopes as a COVID-19 treatment.

A draft report from the World Health Organization (WHO) on clinical trials of remdesivir conducted in China indicated that the treatment did not prove effective. Gilead countered that the trial was terminated early and therefore did not produce statistically significant results, but it was difficult to reverse the turned investor sentiment. Gilead’s stock also fell about 4.3%.