Stocks jumped Wednesday on the back of positive data from a potential coronavirus treatment from Gilead Sciences, while investors digested a sharp drop in U.S. economic activity. The Dow Jones Industrial Average surged 532.31 points, or 2.2%, to 24,633.86. The S&P 500 gained 2.7% to close at 2,939.51 while the Nasdaq Composite closed 3.6% higher at 8,914.71. The major averages also got a boost from the Federal Reserve, which pledged to keep rates near zero for as long as needed and provide additional help to the economy. Wednesday's gains put the S&P 500 up more than 13% for the month. That would be the index's biggest one-month gain since 1974. The Dow is up 12.4% for April and is headed for its biggest monthly gain since 1987.

A study of Gilead's remdesivir drug conducted by the National Institute of Allergy and Infectious Diseases met its primary endpoint, the drugmaker said, lifting expectations for a potential coronavirus treatment. Gilead also released the results of its own study, which showed improvement in patients taking remdesivir to treat the virus. Gilead shares jumped 5.7%. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said remdesivir shows a "clear-cut" positive effect when treating the virus. "Markets are going to move like this on this kind of news," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. "If we had a vaccination, then I think you would see a very different economic recovery. If we have treatments, I think you'll see a little bit quicker of an economic recovery." "We'll take these days, but we're not investing or changing any of our asset allocation because one day," Horneman said. Sentiment was also lifted as Alphabet shares gained 8.9% after the tech giant reported a revenue growth decline that was less steep than forecast. The company's YouTube ad revenues also beat expectations. Other mega-cap tech stocks such as Facebook climbed 6.2%. Amazon gained 2.5% while Apple advanced 3.3%. The S&P 500 tech sector closed 0.3% higher for the year, erasing its earlier losses for 2020. The Gilead news along with the strong move higher from Alphabet offset news of a steep drop in U.S. economic activity. U.S. GDP shrank by 4.8% in the first quarter for the country's biggest contraction since the financial crisis. Stocks have been on a rip-roaring rally ever since March 23, when they hit their coronavirus sell-off lows. The Dow is up more than 34% in that time while the S&P 500 has rallied over 33%.

"The market is signaling that by May 15 through June 1 the majority of the economy will reopen," said Yousef Abbasi, director of U.S. institutional equities at INTL FCStone. He also noted this rally has been largely driven by cyclical stocks that were punished earlier in the year. However, he thinks the market may be getting ahead of itself. "It's not like the economy is going to take on the capacity that's already there," he said.

Fed on hold