<ol><li>Stocks Are Rising as Economic News Worsens <font color="#6f6f6f">The New York Times</font></li><li>Here are the stock market’s biggest winners on Wednesday as investors see new hope <font color="#6f6f6f">MarketWatch</font></li><li>Stock market live Wednesday: Stocks jump on drug hope, best month since '74?, tech positive for year <font color="#6f6f6f">CNBC</font></li><li>Stocks rise on hopes for progress in fighting coronavirus <font color="#6f6f6f">OregonLive</font></li><li>Stocks charge higher on hopes for progress in fighting COVID-19 <font color="#6f6f6f">Press Herald</font></li><li><strong>View Full Coverage on Google News</strong></li></ol>
The government said on Wednesday that the U.S. economy had suffered its worst contraction since the last recession. The head of the Federal Reserve later said he didn’t know how bad this downturn would be, or how long it would last.
S&P 500 stock index had risen 2.7 percent.
That’s been the pattern lately. The drumbeat of grim news — one million known coronavirus cases in the United States, businesses are collapsing, the unemployment rate could reach 16 percent — has done little to deter stocks’ upward march.
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- Asian markets climb after Wall Street’s rally.
- Millions more jobless claims are expected to be reported on Thursday.
- Norway to cut oil production as demand craters.
The direction of the stock market is always determined by a complicated mix of hard data and investor psychology. The price of a stock is based on how much money investors think a company can make in the future. So investors care less about the actual facts reflected in today’s headlines, and more about what kind of picture those facts paint about the coming year.
issued a statement saying its study of the drug showed that it sped up recovery in hospitalized patients with advanced Covid-19.
“The evidence is continuing to mount that remdesivir is having a true treatment effect,” said Dr. Brian Abrahams, co-head of biotechnology equity research at RBC Capital Markets in New York. Dr. Abrahams stressed, however, that it remained unclear what the magnitude of that benefit would be to patients.
It was clear on Wednesday that investors extrapolated this shred of good news into a brighter outlook for the economy. The Russell 2000 index of small capitalization stocks soared nearly 5 percent. Such smaller stocks tend to be less globally diversified than larger companies, meaning they’re more reliant on the U.S. domestic economy.
Some of the biggest jumps were in parts of the market that have been hardest hit by the virus. Norwegian Cruise Line Holdings rose more than 20 percent. Royal Caribbean and Carnival also rose more than 15 percent each. The energy giants Exxon Mobil and Chevron — hard hit by the 70 percent collapse in crude prices this year — were both up more than 5 percent.
Technology giants also climbed after Alphabet, Google’s parent company, reported better-than-expected sales results after the close of trading on Tuesday. Since Microsoft, Apple, Amazon, Facebook and Alphabet are among the most highly valued companies in the United States, their heft gives them outsize sway in market-cap-weighted stock market indexes such as the S&P 500.
“A lot of it really is about hope,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors, an investment company. “You’re getting little hints of hope.”