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The S&P 500 ended marginally lower on Thursday after a report that an experimental antiviral drug for the coronavirus flopped in its first randomized clinical trial, denting earlier optimism that the impact of the pandemic on the labor market was nearing an end. Canada’s S&P/TSX Composite Index also ended with minor losses, despite a major rally in the price of crude oil.

All three main U.S. stock indexes fell back from gains of over 1% after the Financial Times reported that a Chinese trial showed that Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream. The TSX erased earlier gains on the report as well.

Gilead said the results from the study were inconclusive as it was terminated early.

Last Friday, Wall Street rallied in part because of a report that COVID-19 patients in a separate study had responded positively to remdesivir.

The market’s sensitivity to news related to coronavirus therapies reflects investors’ desperation for any indication of when the global economy might be able to start returning to normal.

“The hope as of last week was that Gilead could take the fear of dying off the table, which would result in a much quicker, cleaner, faster recovery. If that’s less likely today than it was yesterday, it is perfectly reasonable for the market to have sold off,” said David Katz, chief investment officer at Matrix Asset Advisors.

Stocks rallied earlier in the session after data that showed weekly U.S. jobless claims fell to 4.43 million from a revised 5.24 million. However, the numbers were still staggering, taking the total in the past five weeks to a record 26 million and wiping out all the jobs created since the financial crisis.

“The disappointing drug news stings, but considering another 4 million people lost their jobs, the disconnect between how well stocks have held up in the face of historically bad economic data continues,” said Ryan Detrick, senior market strategist at LPL Financial.

Meanwhile, the U.S. Congress was preparing nearly $500 billion more in aid for small businesses and hospitals, which was expected to clear the House of Representatives later in the day.

The U.S. energy index rose 3%, easily leading the 11 S&P 500 sectors as oil prices recovered in a tumultuous week that saw U.S. crude futures crash below zero for the first time in history.

The TSX Energy Capped Index rose 2.3 per cent. Oil extended its rebound after major oil-producing nations said they would accelerate planned production cuts to combat the dramatic slump in demand due to the COVID-19 pandemic.

Brent rose 96 cents, or 4.7%, to settle at $21.33 a barrel, while WTI jumped $2.72, or 19.7%, to settle at $16.50.

“We are seeing a real reaction within the U.S. industry to these super low prices and that is creating some green shoots that is allowing prices to rebound a bit,” said John Kilduff, partner at hedge fund Again Capital LLC in New York. “But it is still hard to get excited about prices just above $15 a barrel.”

He was referring to the decline in U.S. oil rigs to their lowest since 2016 and a 100,000 barrel per day (bpd) drop in U.S. crude output last week to 12.2 million bpd.

The Organization of the Petroleum Exporting Countries and other oil producing nations, a grouping known as OPEC+, agreed this month to cut output by a record 9.7 million bpd, around 10% of global supply, to support oil prices, but prices continued to decline.

Kuwait said on Thursday it had begun cutting oil supply to the international market, ahead of the May 1 date when the deal was supposed to take effect.

Whether that will be sufficient to offset weak demand is unclear. Rystad Energy cut its forecast for oil demand in 2020 to 89.2 million bpd, a 10% decline from 2019. Last week, the energy consultant projected demand would fall to 90.3 million bpd in 2020.

Russia is looking for options to cut its production and may go as far as burning its own oil, sources said. Its production has not changed much from March until now.

The market was also higher after U.S. President Donald Trump said he had instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf, although he added later he was not changing the military’s rules of engagement.

The head of Iran’s Revolutionary Guards said Tehran will destroy U.S. warships if its security is threatened in the Gulf.

“This ratchets up tensions once again between the U.S. and Iran. However, given the glut we have in the oil market, it is difficult to see this offering lasting support to the market, unless the situation does escalate further,” ING’s head of commodities strategy Warren Patterson said.

U.S. stock indexes have rallied this month on a raft of global stimulus, but the benchmark S&P 500 remains more than 15% below its record high as worsening economic indicators foreshadow a deep global recession.

A survey showed U.S. business activity plumbed new record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending.

The CBOE volatility index has retreated from 12-year peaks hit last month, but remains well above levels seen in the past two years and analysts have warned of another sell-off as corporate America issues worrying forecasts for the year.

The Dow Jones Industrial Average rose 0.17% to end at 23,515.26 points, while the S&P 500 lost 0.05% to finish at 2,797.8.

The Nasdaq Composite slipped 0.01% to 8,494.75.

The TSX fell 0.26% at 14,251.09.

Las Vegas Sands Corp jumped 12% after the casino operator predicted a speedy recovery in Asia on pent-up gambling demand.

Reuters, Globe staff

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