S&P 500 Points Higher As Coronavirus Drug Results Look Promising

The S&P 500 has been adding to its gains in the last few weeks as I predicted, and the trend looks to continue as investors price in better times ahead. Yesterday, saw a shockingly soft Philadelphia manufacturing index that declined to levels not seen since 1980, while another 5.2 million people applied for unemployment benefits, taking the total to 22 million over the past month.

However, the S&P 500 ignored the bad data as it was for March, and instead leapt higher as President Trump announced a plan to reopen the US economy. There was also news that Gilead’s Ebola medicine, Remdesivir, in a real test, had helped a majority of severe coronavirus cases to recuperate. The cost per treatment could be as low as 9 dollars, making it accessible to most people.

One reason, why I think the Dow Jones ignored the soft US data is because it was from March when they closed down the economy. Figures from April should also be bad, but investors understand that this is temporary and that the US economy could recuperate as China did. The trend in the S&P 500 could, therefore, remain upwards. However, this opportunity to price in better times ahead is closing fast as the S&P 500 has recuperated almost 61.8% of its slide from its 2020 high.

However, for now, the mood in the markets remains bullish, and so is the trend. I will treat the S&P 500 as bullish above the April 9 low of 2704.7, and I suspect the next bull-leg could start from the 2704.7 to 2801 interval. However, on a break to the April 9 low at   2704, the S&P 500 could reach the April 7 low at 2624.6.

 

S&P 500 Chart

 

By Alejandro Zambrano, Chief Market Strategist at ATFX.

 

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