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You can find the current article at its original source at https://www.theguardian.com/business/live/2020/apr/29/markets-covid-us-economy-federal-reserve-ftse-dow-business-live
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| US economy shrinking, but Covid-19 treatment hopes lift markets - business live | |
| (32 minutes later) | |
| America’s GDP shrank at an annualised rate of 4.8% in January-March, and there’s worse to come... | America’s GDP shrank at an annualised rate of 4.8% in January-March, and there’s worse to come... |
| Astonishingly, America’s slump into recession is partly due to a decline in heathcare spending - in the middle of a pandemic. | |
| That’s because many operations and procedures can’t take place, either because hospitals are dealing with Covid-19 patients, or because physical distancing rules mean medics must stay away. | |
| Economics professor Justin Wolfers shows that half of the drop in GDP can be attributed to healthcare: | |
| Jason Furman, formally economics advisor to Barack Obama, is surprised: | |
| It appears that Gilead > GDP today. | It appears that Gilead > GDP today. |
| Stocks have jumped at the start of trading in New York. | Stocks have jumped at the start of trading in New York. |
| Investors are focusing on the positive trial news about remdesivir’s effects on Covid-19 patients, rather than the dire US GDP figures. | Investors are focusing on the positive trial news about remdesivir’s effects on Covid-19 patients, rather than the dire US GDP figures. |
| The Dow Jones industrial average has gained 401 points, or 1.6%, to 24,503 points, with the S&P 500 up 1.9%. | The Dow Jones industrial average has gained 401 points, or 1.6%, to 24,503 points, with the S&P 500 up 1.9%. |
| Markets are shrugging off the looming US recession, and grasping onto hopes of a medical breakthrough for Covid-19 treatments. | Markets are shrugging off the looming US recession, and grasping onto hopes of a medical breakthrough for Covid-19 treatments. |
| US biopharmaceutical company Gilead has excited investors by announcing positive results from a trial of its antiviral drug remdesivir, to test if it could help severely ill COVID-19 patients. | US biopharmaceutical company Gilead has excited investors by announcing positive results from a trial of its antiviral drug remdesivir, to test if it could help severely ill COVID-19 patients. |
| In a statement, Gilead said remdesivir had shown positive results when given to patients for either a five-day or 10-day course of treatment. | In a statement, Gilead said remdesivir had shown positive results when given to patients for either a five-day or 10-day course of treatment. |
| Preliminary results showed that more than half of patients in both groups improved, and had been discharged from hospital by the 14th day after starting the treatment. | Preliminary results showed that more than half of patients in both groups improved, and had been discharged from hospital by the 14th day after starting the treatment. |
| Merdad Parsey, chief medical officer at Gilead Sciences, says there were similar results between those on the five and 10-day trial: | Merdad Parsey, chief medical officer at Gilead Sciences, says there were similar results between those on the five and 10-day trial: |
| Gilead also reports that patients who received remdesivir earlier were more likely to be released from hospital faster: | Gilead also reports that patients who received remdesivir earlier were more likely to be released from hospital faster: |
| Investors have been watching Gilead’s progress closely, on hopes that remdesivir could treat the symptoms of the coronavirus - which can caused organs to shut down in severe cases, as well as attacking the lungs. | Investors have been watching Gilead’s progress closely, on hopes that remdesivir could treat the symptoms of the coronavirus - which can caused organs to shut down in severe cases, as well as attacking the lungs. |
| Markets had fallen back last week after reports that Remdesivir had failed a trial, so this feels like an encouraging development. | Markets had fallen back last week after reports that Remdesivir had failed a trial, so this feels like an encouraging development. |
| Stocks are moving higher in London, with the FTSE 100 up 2% or 124 points at 6082. | Stocks are moving higher in London, with the FTSE 100 up 2% or 124 points at 6082. |
| Bloomberg economist Michael McDonough has dug into the US GDP report: | Bloomberg economist Michael McDonough has dug into the US GDP report: |
| Here’s our US business editor Dominic Rushe on today’s US GDP report: | Here’s our US business editor Dominic Rushe on today’s US GDP report: |
| He also points out that the current slump could rival the economic collapse of the Great Depression. | He also points out that the current slump could rival the economic collapse of the Great Depression. |
| More here: | More here: |
| Robert Alster, Head of Investment Services at wealth manager Close Brothers Asset Management, says the White House will not like today’s GDP figures. | Robert Alster, Head of Investment Services at wealth manager Close Brothers Asset Management, says the White House will not like today’s GDP figures. |
| The instant reaction to today’s growth report is that America’s economy is suffering, and it’s about to get a lot worse. | The instant reaction to today’s growth report is that America’s economy is suffering, and it’s about to get a lot worse. |
| Wall Street financier Steven Rattner fears that the slump will accelerate alarmingly in the current quarter, so that the economy shrinks at an annualised rate of 40%. | Wall Street financier Steven Rattner fears that the slump will accelerate alarmingly in the current quarter, so that the economy shrinks at an annualised rate of 40%. |
| Dan Primark, business editor of Axios, agrees that things are going to get worse: | Dan Primark, business editor of Axios, agrees that things are going to get worse: |
| Investment strategist Callie Cox points out that US consumer spending plummeted (as people obeyed orders to stay home, and shops and restaurants closed) | Investment strategist Callie Cox points out that US consumer spending plummeted (as people obeyed orders to stay home, and shops and restaurants closed) |
| America’s longest economic expanse in history is over! | America’s longest economic expanse in history is over! |
| The contraction in the last quarter ends a record-breaking run of growth which began back in the summer of 2009. | The contraction in the last quarter ends a record-breaking run of growth which began back in the summer of 2009. |
| America’s economy shrank so sharply in the last quarter because personal spending fell, exports declined, and companies slashed investment. | America’s economy shrank so sharply in the last quarter because personal spending fell, exports declined, and companies slashed investment. |
| The BEA explains: | The BEA explains: |
| NEWSFLASH: America’s economy is contracting at the fastest rate since the financial crisis a decade ago, as the coronavirus lockdown hits activity | NEWSFLASH: America’s economy is contracting at the fastest rate since the financial crisis a decade ago, as the coronavirus lockdown hits activity |
| US GDP shrank at an annualised rate of -4.8% in January-March, new figures from the Bureau of Economic Analysis. That’s worse than the 4.0% annualised contraction expected by economists. | US GDP shrank at an annualised rate of -4.8% in January-March, new figures from the Bureau of Economic Analysis. That’s worse than the 4.0% annualised contraction expected by economists. |
| (That means GDP contracted by roughly 1.2% on a quarter-on-quarter basis). | (That means GDP contracted by roughly 1.2% on a quarter-on-quarter basis). |
| The BEA explains: | The BEA explains: |
| More details to follow.... | More details to follow.... |
| Just in: Boeing has warned its staff that it plans to cut its headcount by 10%. | Just in: Boeing has warned its staff that it plans to cut its headcount by 10%. |
| In an email to staff, CEO Dave Calhoun said the Covid-19 crisis is having a serious impact on demand for its planes. It will use natural wastage, voluntary redundancies, and compulsory layoffs where necessary. | In an email to staff, CEO Dave Calhoun said the Covid-19 crisis is having a serious impact on demand for its planes. It will use natural wastage, voluntary redundancies, and compulsory layoffs where necessary. |
| With demand for commercial airline travel down very sharply, airlines are delaying purchases for new jets (a message also spelled out by Airbus this morning). | With demand for commercial airline travel down very sharply, airlines are delaying purchases for new jets (a message also spelled out by Airbus this morning). |
| Boeing also reported its second quarterly loss in a row, losing $641m in January-March due to the coronavirus pandemic and the ongoing 737 Max grounding. | Boeing also reported its second quarterly loss in a row, losing $641m in January-March due to the coronavirus pandemic and the ongoing 737 Max grounding. |
| Goldman Sachs isn’t convinced by the stock market rally. | Goldman Sachs isn’t convinced by the stock market rally. |
| Its analysts have predicted that Wall Street will drop back towards last months lows, before rallying again later in the year. | Its analysts have predicted that Wall Street will drop back towards last months lows, before rallying again later in the year. |