US STOCKS-Wall Street trims gains after report on coronavirus drug trial

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* U.S. weekly jobless claims fall for third straight week
* Gilead's coronavirus drug flops in first trial -FT
* Indexes: Dow +0.68%, S&P 500 +0.48%, Nasdaq +0.49%

(Updates with afternoon trade)
By Noel Randewich
April 23 (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.
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 .VIX 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 gambling
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.