US stocks were further decimated in the worst week since the 2008 financial crisis as the coronavirus pandemic continued to wreak havoc on people’s daily lives, the economy, and the stock market. A simple mathematical model suggests that the worst might still be ahead of us, as the number of infected people in the U.S. is already in the millions and the death toll might surpass that of China and Italy by the first week of April. Even if the coronavirus is contained, the impact on the economy, not just in the US, but worldwide will be severe and result in a deep recession, which could result in the S&P 500 losing around 30% (an average estimate for a recession) of its value.
The S&P 500 lost 8.18% between March 16 and March 20, while the Dow Jones Industrial Average and NASDAQ Composite dropped by 8.65% and 7.07%, respectively. To appease investors, the government started to work on a number of measures, including zero interest rates and a $700 billion quantitative easing program from the Fed. In the meantime, Congress is working on a relief package that could involve sending checks to all Americans to spur spending, among other things. On Sunday, the Senate failed to reach a deal on a $1.6 trillion stimulus package, but officials suggest that there is still room to negotiate and an updated deal is expected to be put to vote on Monday.
New York and California have already issued stay-at-home orders and President Trump approved national disaster declaration requests for these two states and Washington.
Meanwhile, Financial Advisors remained focused on pretty much the same stocks as the previous week, according to TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors. Tesla Inc (NASDAQ: TSLA), Microsoft Corporation (NASDAQ: MSFT), and Apple Inc (NASDAQ: AAPL) were the top three most-searched tickers among Financial Advisors between March 16 and March 20. Tesla lost almost 9% last week, Apple declined by 5%, but Microsoft Corporation inched lower by less than 2%. They were followed by micro-cap Q.E.P. Co., Inc. (OTC: QEPC) and utilities company Eversource Energy (NYSE: ES), each of whom slid by around 16%.
However, not all stocks that were on Financial Advisors’ radars last week went through the bloodshed. One stock that gained nearly 10% last week was Gilead Sciences, Inc. (NASDAQ: GILD).
Gilead is a healthcare company that stands to gain the most from the pandemic as the company has a drug that has the most potential to treat COVID-19. The drug, called remdesivir is currently undergoing clinical trials and the prospects look pretty bright. Piper Sandler analyst Tyler Van Buren said last week that remdesivir is likely to report positive trial results and the FDA will speed up the process to approve it for broad use in the next several months.
Remdesivir has been around for several years and was one of the drugs studied as a potential treatment for Ebola in 2014. However, it hasn’t been approved by the FDA or regulators in other countries. Scientists have also studied how remdesivir performed against SARS and MERS viruses in the lab and saw positive results in animal studies, which suggests that the drug can have an impact on viruses’ ability to replicate.
Currently, remdesivir is undergoing clinical trials in China and in the US. The FDA and Gilead are providing the drug via “compassionate use” programs that allow patients to get unapproved experimental drugs outside of medical trials. Currently, around 250 patients are benefiting from remdesivir under these programs.
However, despite the high hopes, it may be too soon to say that it will work on humans just as well as it worked in the lab. Nevertheless, remdesivir currently is considered to be one of the best available options at treating coronavirus by the World Health Organization. Last week, WHO launched a large global trial called SOLIDARITY to identify which drug can treat Coronavirus infection from a narrow pool of four treatments. One of the drugs involved in the trial is remdesivir. Three other treatments include anti-malaria drugs Chloroquine and Hydroxychloroquine, ritonavir, and a combination of ritonavir and interferon-beta.