U.S. officials debated the outlines of a gradual reboot of the economy on Friday, as confirmed domestic coronavirus infections continued to rise, leading to concerns about loosening stay-in-place restrictions amid gaps in testing.
President Donald Trump and the White House coronavirus task force focus on a three-phase reopening of the economy, but health experts warn those efforts could be thwarted by an ongoing shortage in testing supplies. The discussions are happening as battered markets surge, sparked by Gilead (GILD), whose experimental drug treatment has reportedly shown promise against the coronavirus.
The U.S. leads the world with over 672,000 diagnosed COVID-19 cases and more than 33,000 deaths, but officials say the outbreak is showing sings of stabilizing, even as New Jersey and New York remain hot zones of confirmed infections. Globally, cases have surpassed 2.1 million, and the death toll is nearing 148,000.
Some states likes Florida, have begun reopening public spaces, like beaches and parks. However, in the midst of a widening public feud with Trump, New York Gov. Andrew Cuomo warned residents to remain vigilant.
“If people tell you the pandemic is ‘over’— they’re wrong,” Cuomo said, adding that the Empire State is still seeing roughly 2,000 new cases per day on declining hospitalizations. This week, he extended the lockdown to May 15, and ordered residents to wear face coverings in public.
The governor also issued a new executive order directing all public and private labs to coordinate with the state’s Department of Health to prioritize diagnostic COVID-19 testing, as part of a wide-ranging effort to restart economic activity.
Parts of Europe and Asia are reopening, even as fears percolate over a second wave of infections. Wuhan, the epicenter of the outbreak in China, dramatically revised its death toll upward by 50%; meanwhile, Singapore has made face coverings compulsory amid a rise in infections.
The ‘go outside’ rally
While cases and death tolls may be stabilizing in parts of the U.S., a lack of mass testing threatens a plans for a smooth reopening. Also complicating matters are isolated protests in key states that are urging an end to the lockdown — which Trump publicly encouraged via Twitter.
Dr. Deborah Birx, coordinator of the White House task force, said her team has been on calls with laboratories around the country— both in academic and commercial settings— to understand why there is a backlog or what has slowed them down.
Recently, the Centers for Medicare and Medicaid Services (CMS) doubled the amount it pays per test in order to help labs boost their output by covering the cost of testing. However, that only applies to Medicare patients.
“We know that the lack of predictable reimbursement for tests performed has been a barrier to entry for some laboratories, and today’s decision will help encourage all laboratories with the appropriate expertise to come to the table and perform COVID-19 testing,” said Julie Khani, president of the American Clinical Laboratory Association, in a recent statement.
Markets, which until very recently have been in free fall, have spiked on optimism that a promising treatment protocol may help speed up an eventual reopening.
Gilead’s antiviral treatment candidate for COVID-19, remdisivir has shown promise in limited tests, but more decisive clinical trial results won’t be available until month’s end.
Amanda Agati, PNC chief investment strategist, said the bank is skeptical over Friday’s price action, which she called “a sell the ‘stay-at-home’ basket and buy the ‘go outside’ basket.”
Consumer oriented stocks are rallying, while some of the names associated with social distancing — i.e. Amazon (AMZN) and Zoom (ZM) — are retracing their gains. That said, “it really hasn’t been a broad-based rally. Frankly the only thing the market cares about is virus data,” Agati told Yahoo Finance on Friday.
Additionally, Moderna (MRNA), which is the first company to enter clinical trials for a vaccine, has received nearly half a billion dollars in funding from the federal government to support its clinical trials and help it scale up production.