(Reuters) – Wall Street was in positive territory on Tuesday but surrendered strong earlier gains after a report that an experimental antiviral drug for the coronavirus flopped in its first randomized clinical trial.

FILE PHOTO: A woman walks in the rain outside the New York Stock Exchange (NYSE) in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 13, 2020. REUTERS/Andrew Kelly

All three main U.S. stock indexes trimmed increases of over 1%, with the S&P 500 and Nasdaq briefly turning negative after the Financial Times reported that a Chinese trial showed that Gilead Science’s (GILD.O) remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.

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.

“If we over-reacted last week to what looked like positive news, it’s fair to give that back when the news turns out to be not so positive,” said Keith Buchanan, a portfolio manager at GLOBALT in Atlanta. “Volatility is here to stay, both up and down, on a daily basis.”

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 decline in initial jobless claims is encouraging, but the damage has already been done with the insured unemployment rate surging to a record high in the (previous) week,” said Paul Ashworth, chief U.S. economist at Capital Economics.

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

The energy index .SPNY rose 3.2%, 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. [O/R]

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.

Still, the mood was “risk-on” with utilities .SPLRCU, real estate .SPLRCR and consumer staples .SPLRCS the only decliners among S&P 500 sectors.

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 selloff as corporate America issues worrying forecasts for the year.

At 2:36 p.m. ET, the Dow Jones Industrial Average .DJI was up 0.68% at 23,635.5 points, while the S&P 500 .SPX gained 0.48% to 2,812.77.

The Nasdaq Composite .IXIC added 0.49% to 8,537.23.

Las Vegas Sands Corp (LVS.N) jumped 11% after the casino operator predicted a speedy recovery in Asia on pent-up demand.

Advancing issues outnumbered declining ones on the NYSE by a 2.00-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored advancers.

The S&P 500 posted 6 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 33 new highs and 15 new lows.

Reporting by Noel Randewich in New York and Shreyashi Sanyal and C Nivedita in Bengaluru; Editing by Will Dunham

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