Stock market live updates: Dow up 200, Charlie Munger comments on Tesla and more

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Oil prices moved higher on Wednesday as investors eyed potentially steeper production cuts form OPEC, and as a slowdown in new coronavirus cases eased fears that oil demand could take an even larger hit. U.S. West Texas Intermediate gained 2.46%, or $1.23, to settle at $51.17 per barrel for its best day since Jan. 3. International benchmark Brent crude gained 3.3% to settle at $55.79. Earlier in the day WTI reached a session high of $51.73, but some of those gains were pared after a larger-than-expected build in U.S. inventory. The Energy Information Administration said that for the week ending Feb. 7 stockpiles rose by 7.5 million barrels. Analysts had been expecting a build of 3.2 million barrels, according to estimates from FactSet. – Stevens

Munger was asked what he thought of the recent crazy trading in Tesla: “I would never buy it and I would never sell it short…I think Elon Musk is peculiar and he may overestimate himself, but he may not be wrong all the time.” -Melloy

Charlie Munger issued a warning about the future on Wednesday. “I think are lots of troubles coming,” he said. “There’s too much wretched excess.” Munger pointed out how much risk is being taken by investors, particularly in China. “In China, … they love to gamble in stocks. This is really stupid. It’s hard to imagine anything dumber than the way the Chinese hold stocks. They’re so good at everything else. It shows how hard it is to be rational.” —Imbert

The U.S. may have the largest economy in the world, but China currently has stronger companies, Berkshire Hathaway’s Charlie Munger said Wednesday. “The strongest companies in the world are not in America,” he said. “I think Chinese companies are stronger than ours and are growing faster.” Munger used the advice a fisherman friend gave him, which was to “‘fish where the fish are.” “You want to fish where the bargains are. It’s that simple.” —Imbert

Charlie Munger, a legendary investor and Warren Buffett’s right-hand man, raised concern over the state of U.S. politics, noting it’s “weirdly awful because of the excesses of hatred you see everywhere.” Munger used California as an example, saying that: “Every 10 years, these nutcases of the right and left get together and throw all the sensible people out by gerrymandering them out.” He added: “That is a crazy way to be governed.” —Imbert

Shares of UnitedHealth, Illinois Tool Works and PepsiCo were among the roughly 30 S&P 500 components to hit all-time highs on Wednesday, leading the broad index to record levels. Moody’s, Ingersoll-Rand and SBA Communications also reach all-time highs. Here are some other stocks to do the same:
Cintas
Eaton
Fastenal
ADP
AMD
Applied Materials
Lam Research
Synopsys
AvalonBay Communities
DaVita
—Imbert, Hayes

Charlie Munger, vice chairman at Berkshire Hathaway and Warren Buffett’s longtime business partner, is addressing shareholders of the Los Angeles-based Daily Journal. Munger, who turned 96 last month, will also answers questions from Daily Journal shareholders. Investors of all stripes look forward to Munger’s annual address at the publisher’s headquarters for the investment wisdom he shares.
Follow this blog for more updates. — Imbert

The Euro fell 0.3% against the dollar to below $1.088 on Wednesday, hitting its lowest level in nearly three years. The common currency has been steadily falling against the greenback since the start of the year as economic data shows a better outlook in the U.S. than Europe. — Pound

Hedge funds posted a loss of 0.22% in January, in line with the S&P 500‘s 0.16% negative return, according to eVestment. Managed futures funds were the best-performing strategy to start 2020, turning in average return of 1.83% last month, the firm said. Long/short equity funds, however, had a rough start to 2020, posting an average loss of 1.02% in January. — Li

The Invesco Solar ETF (TAN) gained 3.8% on Wednesday, hitting its highest level since 2015 and bringing its year-to-date return to 23%. The fund’s top performers were SunPower and Daqo New Energy, both of which were up 11%. The move higher comes as the solar market continues to show strength. “Global solar installations will continue double-digit growth rates into the new decade,” IHS Markit said in January. The firm expects solar installations in 2020 to be seven times larger than the world’s total solar installations a decade ago. – Stevens

To combat a potential economic slowdown amid the coronavirus, Chinese policymakers have taken major steps to restore investor confidence and boost business activity. Fiscal and monetary policies put in place over the past couple weeks include injections of cash by the central bank, tariff exemptions and targeted reserve requirement cuts.— Rattner, Li

The Dow Jones Industrial Average and S&P 500 reached all-time highs as Wall Street shrugged off coronavirus concerns. The 30-stock Dow was up more than 180 points, or 0.6%. The S&P 500 traded 0.5% higher. The Nasdaq Composite traded up 0.7%, just below its record high. —Imbert

As the oil market awaits a decision on OPEC+ production cuts, some analysts say comments from Russia’s sovereign wealth fund could be a possible sign Moscow will agree to expand its deal with OPEC. Russia’s RDIF sovereign wealth fund said that Russian and Saudi companies have discussed possible joint projects and the potential investment of more than $10 billion. Reuters said the discussions took place in Saudi Arabia. RBC’s Helima Croft said all signs are that Russia is getting closer to agreeing to deeper cuts, recommended last week by an OPEC+ technical committee to steady oil prices. She said the $10 billion may be “part of the price of entry for Russian continued cooperation.” Oil prices were up sharply Wednesday but have been falling on fears the spread of the coronavirus will crush demand. Russian oil companies met with Russian Energy Minister Alexander Novak in Moscow Wednesday and were reported to be on board with extending the existing 1.8 million barrel a day but not expanding it. The Russian government has not had an official comment yet. —Domm

Powell finished his second day of testimony on Capitol Hill. He addressed various issues to the Senate Banking Committee Wednesday, including wage growth, the central bank’s monetary policy as well as the coronavirus.

Asked by Arkansas Republican Tom Cotton to detail how the coronavirus could impact U.S. growth, Powell said:
“The real question for the Fed is: What is the likely effect on the U.S. economy? And I think we’ll begin to see that in economic data coming up fairly soon. It’s too uncertain to even speculate about what the level of that will be, and whether it will be persistent, or whether it will lead to a material change in the outlook. But we do expect that there will be some effects.The effects should be substantial in China, important but maybe less substantial in their immediate trading partners. And we’ll be looking at the economic data.” — Franck

Productivity will have to rise before wages can see a meaningful increase, Powell said in addressing multiple questions about low pay. “We’ve seen relatively low productivity in the wake of the financial crisis. It appears to be persistent, and that’s going to mean lower wages. Ultimately, you need rising productivity to create a rising standard of living.” Economists generally expect to see wage growth a product of productivity plus inflation. With productivity rising in the fourth quarter to 1.4% and inflation around 1.6%, that puts wage growth around 3%, a level it’s held for the last year and a half in terms of average hourly earnings. Powell said education is a key. “People with high school degrees, their incomes have stagnated for a long time,” he said. – Cox

Powell says Fed must use forward guidance, purchases in future downturn. “Our traditional tool, of course, is interest rates. And low rates are not really a choice anymore: They are a fact of reality. So we will have less room to cut. That means it’s much more likely that we’ll have to turn to the tools that we used in the financial crisis when we hit the lower bound. Which is forward guidance – which says it will keep rates low – and then it’s also large-scale asset purchases of longer-term securities to drive longer-term rates down and support the economy. We will use those tools, I believe we will use them aggressively should the need arise to do so. There’s no need to do that now. But we will use those tools aggressively. — Franck

Federal Reserve Chairman Jerome Powell offered his take on income inequality, saying addressing the issue should be “an important national priority” as the economic expansion continues. “It’s been a particularly good time to be at the top end of the income spectrum,” the central bank chief told members of the Senate Banking Committee. “This is not our self-image as a country. It’s something we need to address.” Powell noted that mobility, or the chances of moving from lower income strata to the upper levels, is low now, due at least in part to a workforce not well enough equipped to handle the increasing technical nature of jobs. “We want, of course, prosperity to be broadly shared. It comes down to really education and training that enables people to do well in the modern economy, which is a globalized economy that is less about manufacturing. Manufacturing jobs are more technical than what they were. We need a workforce that can benefit from technology and globalization,” he said. – Cox

The Dow has hit a new high for the session and a new all-time high, up more than 250 points to 29,535.98. Credit a turnaround in Apple shares and gains in Cisco, which reports after the bell. Powell has not said anything with a market impact so far. -Melloy

Follow this blog for any comments from the Fed chief that impacts markets.

The Dow Jones Industrial Average climbed 202 points at the open, hitting a new all-time high, as investors shrugged off fears around the coronavirus. Big industrial names Dow.Inc and Caterpillar were the biggest winners in the 30-stock index, gaining 2% each. The S&P 500 rose 0.5%, headed for its third consecutive day of gains. — Li

Oil prices jumped more than 2% on Wednesday as China reported the lowest daily number of new coronavirus cases since late January, easing concerns about a drop off in demand for oil. Prices also got a boost as traders hope for deeper production cuts from OPEC, after the cartel said Wednesday that worldwide demand for oil will be 230,000 barrels per day less than previously thought thanks to the coronavirus. U.S. West Texas Intermediate crude rose 2.4% to trade at $51.16, while international benchmark Brent crude gained 3% to trade at $55.62. Both contracts, however, are still trading in bear market territory. —Stevens

Shares of Shopify gained more than 9% in premarket trading after the e-commerce company beat expectations for the fourth quarter and projected higher than expected revenue for 2020. The company reported 43 cents in adjusted earnings per share and $505.2 million in revenue, with its subscriptions solutions segment growing by 37%. Analysts expected 24 cents in earnings per share and $482.1 million in revenue, according to Refinitiv. The company also said it expects revenues to be between $2.13 billion and $2.16 billion in 2020, about 35% higher than last year. Wall Street expected guidance of $2.12 billion, according to FactSet. —Pound

The percentage of bullish investors has bounced back to where it was before the coronavirus outbreak rattled the market, Peter Boockvar of Bleakley Advisory Group said in a note. Boockvar was citing data from Investors Intelligence. “Bottom line, after seeing extreme bull readings in a variety of metrics literally days before the virus outbreak, the pullback in stocks rung some of that optimism out but it’s coming back rather quickly. Buy on the dip remains firmly embedded in the mentality of the investor as we know,” Boockvar wrote. —Pound

Shares of Wynn Resorts and Las Vegas Sands popped 3.2% and 2.2%, respectively, in premarket trading on Wednesday after Bank of America upgraded the casino stocks to buy from neutral. The firm said the casino companies, which have been hit from heightened fear about the Chinese coronavirus, will rebound as the number of virus cases meaningfully deadline. This is a reversal for Bank of America, which last month downgraded Wynn Resorts due to fear about the virus. The firm said the next catalyst for the stocks will be the reopening of casinos in Macao, which government officials closed for 15 days. —Fitzgerald

Shares of chipmaker Micron rose nearly 3% in the premarket after UBS updated them to a buy. “As cyclical concerns evaporate, structural dynamics should carry the day,” the analysts said. The firm also lifted its target on the stock to $75 per share from $47 per share, which is 31% higher than where it closed Tuesday. UBS also raised its full-year estimates on Micron, saying it has “closed the gap with other major semiconductor companies.” Shares of Micron have rallied 41% over the last year. —Stevens

Shares of CVS Health rose nearly 3% in Wednesday’s premarket trading after the company’s fourth-quarter earnings topped analyst expectations on the top and bottom line. Adjusted earnings per share came in at $1.73 while revenue rose to $66.9 billion. Consensus estimates were for $1.68 per share in earnings and $63.97 billion, respectively, according to Refinitiv. Same-store sales rose 3.2% during the quarter, while sales in the pharmacy unit grew 4.1%. In September, a federal judge signed off on the company’s $69 billion merger with insurer Aetna, which CVS has said will lead to double-digit growth. —Stevens

Federal Reserve Chairman Jerome Powell is scheduled to return to Capitol Hill on Wednesday for a second day of testimony on monetary policy, the economy and financial statutes. The Senate Banking Committee hearing is set to begin at 9:30 a.m. ET and include Powell’s already-published prepared remarks before a Q&A session. In his testimony before the House Financial Services Committee on Tuesday, Powell said that the current, low level of interest rates is appropriate given tame inflation, low unemployment and modest economic growth. But he cautioned that low interest rates, while a positive for business borrowing, could hamstring the Fed’s ability to stimulate the economy in the event of a future downturn. —Franck

Shares of Bed Bath & Beyond tanked 25% during Wednesday’s premarket trading after the company said that same-stores sales in December and January fell 5.4%. The company said that sales were hurt by additional promotions, inventory issues and falling store traffic. “We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges,” CEO Mark Tritton said. Shares of the retailer gained more than 50% in 2019, but are down 14% so far this year. —Stevens