The Queen Mary has for years been a landmark for the city of Long Beach, an iconic ocean liner that acted as a majestic sentry at the port and a popular attraction for both tourists and locals.
But the aging ship has in recent years become more of a white elephant in need of millions of dollars in repairs just to stay afloat.
Years of mounting financial woes, a pandemic shutdown and much-needed repairs made for an uncertain future for the Queen Mary. Financial audits showed the ship was running a deficit, and at least one report warned that it was at risk of sinking if it didn’t get millions of dollars in repairs.
But now, the 90-year-old ship seems to be headed for smoother sailing, with financial records showing it is finally turning a profit for the city of Long Beach.
On the ocean liner that has been turned into a hotel and tourist attraction, rooms are being booked, visitors are touring the ship, and the Queen Mary’s operator said the number of visitors has been outpacing the figures from before the COVID pandemic, signaling a new, hopefully better, era for the famous ship docked in the Long Beach Harbor.
But the recent financial turnaround will do little in the short term to address the hundreds of millions of dollars in repairs needed to keep the ship afloat and open to the public.
The Queen Mary closed for more than three years because of the pandemic, and stayed closed due to much-needed repairs. But once the ship reopened in April — this time under the city’s direction instead of a leaseholder — visitors began to return in greater numbers. The ship has about 200 rooms and several large halls that can be booked for weddings and other gatherings.
“Even though it’s been here since 1967, it was kind of a relaunch — a new Queen Mary if you will,” said Steve Caloca, managing director of the ship under the contracted operator, Evolution.
It was a slow reopening, with just over a dozen rooms booked in the Queen Mary in all of April. But financial records obtained by The Times show the number of bookings quickly multiplied in the coming weeks.
By July, more than 4,300 room nights were booked in the Queen Mary, and the ship’s operator has seen at least 3,730 bookings a month since.
“We reopened after a three-and-a-half-year hiatus, which is nice, and we’re making money, which is nice,” Caloca said.
The Queen Mary was still operating in a deficit during the first two months it reopened, according to financial information provided by the city. By June, however, the ship’s revenue began to outpace its expenses.
According to city records, between June and October of last year, the ship generated more than $12.6 million in revenue and more than $3 million in profits.
It’s not just rooms in the ship’s hotel that are bringing in visitors and their cash either, Caloca said.
“We were getting the word out that there are things to do here,” he said. “It’s not just a beautiful ship.”
The Queen Mary began to offer old and new tours of the 1,019.5-foot ship, and hosting events to draw in locals, like $10 entry fees on Tuesdays, he said.
A game room and revamped observation bar are there for overnight and day guests, and the ship also rolled out the commodore’s office, where officers are available to answer guests’ questions about the ship.
“We asked, what can guests do now that they’re staying at the Queen Mary, what kind of content can we provide?” Caloca said. “We’re able to create things for people to do here in Long Beach.”
But the ship has also needed, and continues to need, repairs and maintenance, he said.
Much of the work done on the ship has centered on keeping the ship safe for visitors, as well as regular upkeep like painting, new flooring and lighting, and replacing new boilers and electrical transformers on the ship.
For the Queen Mary, which has been in dire need of repairs and work for years, turning a profit in 2023 is a significant turnabout in its recent history.
Financial audits of the ship obtained by The Times shows that from 2007 to 2009, the Queen Mary continued to see losses of more than $31 million.
A profit could mean the ship could get some much-needed TLC to keep it financially, and literally, afloat.
“When we get excited about the money, it’s not that we made a profit,” Caloca said. “It’s that we made money, but now we can put it back on the ship that we love so much.”
The city of Long Beach took over the Queen Mary in 2021, after worries that the aging ship was not being maintained. One 2017 study of the ship found that it needed up to $289 million in upgrades and renovations, including much-needed work to keep parts of it from flooding.
Making the ship a profit center for the city has been a challenge for several lease operators — including the Walt Disney Co. — that have been hired to operate the ship over the last few decades.
Now, the profits coming in can also be geared toward new activities and entertainment to keep attracting guests into the Queen Mary, Caloca said.
This summer, operators hope to reopen a movie theater at the ship, which can also double as a lecture hall and host other events, Caloca said. Another 100 rooms are expected to open by April.
“It’s not just, ‘Let’s fix it so it doesn’t break,” Caloca said. “It’s also, ‘Let’s fix it and make it so people want to come.’”
There are car chase fanatics, and then there’s me.
During high school, I suffered through weekend reruns of “Little House on the Prairie” and “M*A*S*H” in hopes that the stations would cut to a live police pursuit. In college, I wrote a term paper exploring their allure and even interviewed a man who charged a dollar a month to alert subscribers via beeper whenever one started.
When I earned enough money for a Sony Playstation in the mid-2000s, one of the first games I bought was “Grand Theft Auto: San Andreas” so I could live vicariously through my character as he crashed through blockades while blasting “Pressure Drop” by Toots and the Maytals. I live-tweeted real-life chases for years, à la ManningCast, and I still tune into KCAL-TV Channel 9 every night at home for their three-hour news block — just in case.
I’m a fan despite knowing I shouldn’t like them. Pursuits are a waste of police resources. Watching them encourages stations to air more of them, which encourages copycats. Too many end with innocent bystanders maimed or killed. And yet, like too many Southern Californians, I just can’t quit. Seeing someone flee the law at 90 miles per hour while caroming across crowded freeways taps into a Jungian desire to buck authority, channels the American love for the open road and offers a cheap adrenaline rush — all from the safety of our living rooms.
So I was excited when Pluto TV, a free streaming service best known for airing classics like “I Love Lucy,” “Dr. Who” and “The Carol Burnett Show,” debuted a 24-hour car chase channel last week. I left it on for an entire day, expecting to be endlessly entertained.
California Highway Patrol chase Al Cowlings, driving, and O.J. Simpson, hiding in rear of white Bronco on the 91 Freeway in 1994.
(Allen J. Schaben / Los Angeles Times)
Car Chase — that’s the direct, if unimaginative, name for Pluto TV’s new channel — airs each pursuit from the first breaking news chyron to its inevitable end. Almost all first appeared over the past few years on Channel 2 and Channel 9, both owned by Pluto TV’s parent company, Paramount. Mundane commercials — cellphone games, Toyota, some prescription drug hawked by Queen Latifah — break up the pursuits, so that each feels like a play with acts.
The day I tuned in, I saw a stolen black pickup wheeze up the Sepulveda Pass. A big U-Haul barreled down the 91 Freeway in Anaheim. A woman made it all the way to Fallbrook. Most passed through the San Fernando Valley, that speedster paradise of long, straight highways and streets. The best one lasted all of two minutes, ending with a car skidding out of control and crashing into a building before the driver tried to make a run for it and got tackled by law enforcement officers. Nearly all happened at night and still had the timestamp, station logo and temperature of when it originally aired.
It was all as surprising as Old Faithful.
Newscasters and helicopter reporters offered the same pablum. No one ever got away at the end. This is what millions of people like myself have obsessed over for decades? The only attempt at anything original came during the commercial breaks, when an overly dramatic announcer offered boilerplate slogans: More from this car chase when we come back. Stand by, for more — Car Chase. Helicopter to base, we’re in the air with more Car Chase. We’re back up — over the Chase.
After sitting through hour after hour, I realized that watching people peel potatoes offers as much excitement — and there’s even more potential for blood.
You’ve seen one, you’ve seen them all — yet you can’t turn away. I was so mesmerized by Car Chase that I forgot to watch the much-anticipated Monday Night Football matchup between the Kansas City Chiefs and Philadelphia Eagles.
By hour 9, I realized that the siren call of police pursuits isn’t the possibility of violence or even escape, but rather how comforting they are. We’ve collectively seen so many televised police pursuits that they’re part of our Southern California experience, like beautiful sunsets and screeching green parrots. You can instantly summon the sound and look of a car chase in your mind. The din of the helicopter blades in the background as the chopper pilot-reporter offers his play-by-play. The hushed tones of the newscasters. The grainy, widescreen shots of the getaway vehicle and the cops who want to catch it.
In our increasingly fractured society, car chases are one of the last collective Southern Californian experiences. When there’s one going on, all of our problems take a break, if only for an hour. If there weren’t any more car chases, something would be terribly wrong. We stare on, even as we look away from the fact that the central characters are people in extremely troubled moments, risking their lives and those of others.
No wonder Pluto TV — whose nostalgia shtick is so thick that one of their channels is devoted to Ed Sullivan’s best musical and comedic guests — was the network that thought it up.
The aftermath of a police pursuit in Echo Park in 2019. Three robbery suspects were killed and a fourth hospitalized in critical condition.
(Irfan Khan / Los Angeles Times)
“Data and research show that car chases have been of huge interest to audiences for many years,” a Pluto TV spokesperson told me via email. The streamer has no plans to change what they’re doing right now but promised “we will continue to listen to our audiences” and tweak as needed.
Group them by theme — motorcycles, RVs, funny endings — with appropriate soundtracks (“Yakety Sax,” for sure, but don’t forget “Foggy Mountain Breakdown”). Pull from Paramount’s collection of films with legendary car chases — “Mission Impossible,” “The Italian Job,” even “Grease.” And for crying out loud, bunch your commercials together at the start or finish of a car chase, the way public television thanks its sponsors. I don’t need the Charmin bears harshing my buzz.
Car Chase could be the Southern California scrapbook we didn’t know we needed.
Then again, maybe Pluto TV doesn’t need to change a single thing. My friend called at one point during my marathon. He’s a serious guy, a political strategist by trade. I had barely explained the channel’s premise before he interrupted me.
Laphonza Butler has been living a whirlwind these past few weeks.
Overnight she went from being a campaign strategist and behind-the-scenes operative — unknown to most, save political insiders — to a U.S. senator representing nearly 40 million residents of the most important state in the union.
Even Butler was surprised Gov. Gavin Newsom tapped her to replace the late Sen. Dianne Feinstein. It was like plucking a set designer from the wings and placing her, with barely any notice, directly at center stage.
Since then — as Butler learned which Capitol Hill stairways lead where, flew cross-country to meet with assorted constituencies and developed a case of COVID-19 — one overriding question trailed her: Would she run for a full term in 2024?
It was the right decision, and a politically astute one.
By foregoing a campaign that would have been difficult to win, Butler leaves herself well-positioned for a future run if she chooses to seek office. It also allows the state’s very fresh freshman senator to devote herself full-time to her congressional duties.
Which is exactly what Butler should do.
The decision, announced abruptly, was hastened by a number of impending deadlines, among them cutoffs to vie for the state Democratic Party’s endorsement and to be included as a candidate in the information guide mailed to every California voter.
But the most important date facing Butler was March 5, when the state holds its top-two “jungle” primary. (The two candidates receiving the most votes will advance to a November runoff, regardless of party.)
That contest is a little over four months from now, an incredibly short time to ramp up a statewide campaign, raise the many millions of dollars needed to advertise and develop even a cursory relationship with voters sprawling over California’s vast expanse.
Feinstein, for years the state’s best known politician, took a long time to develop her near-universal Eureka-to-Yucaipa name recognition. And that was after she had already waged two statewide campaigns.
Butler faced other challenges.
She lived in Maryland and worked in Washington, D.C., leading the women’s campaign organization Emily’s List before her Senate appointment. Her lack of longstanding California residency would have surely become an issue.
A former labor leader, Butler also faced agita from the political left for the handsome sum she made working for Uber as the ride-hailing service worked to undermine its drivers’ push for better pay and working conditions. That, too, would have been an issue.
Neither, however, posed insurmountable hurdles.
The greater impediments for Butler were time and money, two vital ingredients to political success.
She would have started flat-footed against a formidable field of contenders, including Reps. Adam Schiff, Katie Porter and Barbara Lee who, collectively, have already amassed tens of millions of dollars.
Butler, for her part, has not demonstrated particular fundraising prowess. Some familiar with her work at Emily’s List were underwhelmed with its financial ledger under her watch.
Also, political handicappers tended to overstate the advantage of Butler’s labor connections. Although she enjoys a number of personal connections, several unions had already committed to others in the race, or assumed a wait-and-see approach. It’s not hard to imagine much of organized labor staying neutral, or endorsing multiple candidates, had Butler belatedly entered the Senate contest.
In bowing out, Butler issued the kind of statement — brave, a little cocky — one often hears under such circumstances.
“Knowing you can win a campaign doesn’t always mean you should run a campaign,” she said.
The rest of her written remarks seemed more cognizant and truer to the heart.
“I know this will be a surprise to many because traditionally we don’t see those who have power let it go,” Butler stated. “It may not be the decision people expected but it’s the right one for me.”
Once she departs the Senate, it’s not likely she’ll return anytime soon, given the relatively young age of California’s other senator, 50-year-old Alex Padilla, and the likelihood whomever voters choose in November 2024 will serve a good long time.
But the California governor’s seat comes open in 2026 and Butler could be an attractive candidate in a wide-open field.
She’ll now have a little over year to rack up some achievements in Washington, travel the state to introduce herself to voters and, if Butler chooses, lay the necessary political and financial groundwork for a future political run.
Far better than working half-time in the Senate and half-time on a quite possibly futile attempt to stay there.
To run or not to run was the first major political test facing California’s newly minted senator.
David Rosenberg, the former chief North American economist at Merrill Lynch, has been saying for almost a year that the Fed means business and investors should take the U.S. central bank’s effort to fight inflation both seriously and literally.
Rosenberg, now president of Toronto-based Rosenberg Research & Associates Inc., expects investors will face more pain in financial markets in the months to come.
“The recession’s just starting,” Rosenberg said in an interview with MarketWatch. “The market bottoms typically in the sixth or seventh inning of the recession, deep into the Fed easing cycle.” Investors can expect to endure more uncertainty leading up to the time — and it will come — when the Fed first pauses its current run of interest rate hikes and then begins to cut.
Fortunately for investors, the Fed’s pause and perhaps even cuts will come in 2023, Rosenberg predicts. Unfortunately, he added, the S&P 500 SPX, -0.61%
could drop 30% from its current level before that happens. Said Rosenberg: “You’re left with the S&P 500 bottoming out somewhere close to 2,900.”
At that point, Rosenberg added, stocks will look attractive again. But that’s a story for 2024.
In this recent interview, which has been edited for length and clarity, Rosenberg offered a playbook for investors to follow this year and to prepare for a more bullish 2024. Meanwhile, he said, as they wait for the much-anticipated Fed pivot, investors should make their own pivot to defensive sectors of the financial markets — including bonds, gold and dividend-paying stocks.
MarketWatch: So many people out there are expecting a recession. But stocks have performed well to start the year. Are investors and Wall Street out of touch?
Rosenberg: Investor sentiment is out of line; the household sector is still enormously overweight equities. There is a disconnect between how investors feel about the outlook and how they’re actually positioned. They feel bearish but they’re still positioned bullishly, and that is a classic case of cognitive dissonance. We also have a situation where there is a lot of talk about recession and about how this is the most widely expected recession of all time, and yet the analyst community is still expecting corporate earnings growth to be positive in 2023.
In a plain-vanilla recession, earnings go down 20%. We’ve never had a recession where earnings were up at all. The consensus is that we are going to see corporate earnings expand in 2023. So there’s another glaring anomaly. We are being told this is a widely expected recession, and yet it’s not reflected in earnings estimates – at least not yet.
There’s nothing right now in my collection of metrics telling me that we’re anywhere close to a bottom. 2022 was the year where the Fed tightened policy aggressively and that showed up in the marketplace in a compression in the price-earnings multiple from roughly 22 to around 17. The story in 2022 was about what the rate hikes did to the market multiple; 2023 will be about what those rate hikes do to corporate earnings.
“ You’re left with the S&P 500 bottoming out somewhere close to 2,900. ”
When you’re attempting to be reasonable and come up with a sensible multiple for this market, given where the risk-free interest rate is now, and we can generously assume a roughly 15 price-earnings multiple. Then you slap that on a recession earning environment, and you’re left with the S&P 500 bottoming out somewhere close to 2900.
This is just pure mathematics. All the stock market is at any point is earnings multiplied by the multiple you want to apply to that earnings stream. That multiple is sensitive to interest rates. All we’ve seen is Act I — multiple compression. We haven’t yet seen the market multiple dip below the long-run mean, which is closer to 16. You’ve never had a bear market bottom with the multiple above the long-run average. That just doesn’t happen.
David Rosenberg: ‘You want to be in defensive areas with strong balance sheets, earnings visibility, solid dividend yields and dividend payout ratios.’
Rosenberg Research
MarketWatch: The market wants a “Powell put” to rescue stocks, but may have to settle for a “Powell pause.” When the Fed finally pauses its rate hikes, is that a signal to turn bullish?
Rosenberg: The stock market bottoms 70% of the way into a recession and 70% of the way into the easing cycle. What’s more important is that the Fed will pause, and then will pivot. That is going to be a 2023 story.
The Fed will shift its views as circumstances change. The S&P 500 low will be south of 3000 and then it’s a matter of time. The Fed will pause, the markets will have a knee-jerk positive reaction you can trade. Then the Fed will start to cut interest rates, and that usually takes place six months after the pause. Then there will be a lot of giddiness in the market for a short time. When the market bottoms, it’s the mirror image of when it peaks. The market peaks when it starts to see the recession coming. The next bull market will start once investors begin to see the recovery.
But the recession’s just starting. The market bottoms typically in the sixth or seventh inning of the recession, deep into the Fed easing cycle when the central bank has cut interest rates enough to push the yield curve back to a positive slope. That is many months away. We have to wait for the pause, the pivot, and for rate cuts to steepen the yield curve. That will be a late 2023, early 2024 story.
MarketWatch: How concerned are you about corporate and household debt? Are there echoes of the 2008-09 Great Recession?
Rosenberg: There’s not going to be a replay of 2008-09. It doesn’t mean there won’t be a major financial spasm. That always happens after a Fed tightening cycle. The excesses are exposed, and expunged. I look at it more as it could be a replay of what happened with nonbank financials in the 1980s, early 1990s, that engulfed the savings and loan industry. I am concerned about the banks in the sense that they have a tremendous amount of commercial real estate exposure on their balance sheets. I do think the banks will be compelled to bolster their loan-loss reserves, and that will come out of their earnings performance. That’s not the same as incurring capitalization problems, so I don’t see any major banks defaulting or being at risk of default.
But I’m concerned about other pockets of the financial sector. The banks are actually less important to the overall credit market than they’ve been in the past. This is not a repeat of 2008-09 but we do have to focus on where the extreme leverage is centered.
It’s not necessarily in the banks this time; it is in other sources such as private equity, private debt, and they have yet to fully mark-to-market their assets. That’s an area of concern. The parts of the market that cater directly to the consumer, like credit cards, we’re already starting to see signs of stress in terms of the rise in 30-day late-payment rates. Early stage arrears are surfacing in credit cards, auto loans and even some elements of the mortgage market. The big risk to me is not so much the banks, but the nonbank financials that cater to credit cards, auto loans, and private equity and private debt.
MarketWatch: Why should individuals care about trouble in private equity and private debt? That’s for the wealthy and the big institutions.
Rosenberg: Unless private investment firms gate their assets, you’re going to end up getting a flood of redemptions and asset sales, and that affects all markets. Markets are intertwined. Redemptions and forced asset sales will affect market valuations in general. We’re seeing deflation in the equity market and now in a much more important market for individuals, which is residential real estate. One of the reasons why so many people have delayed their return to the labor market is they looked at their wealth, principally equities and real estate, and thought they could retire early based on this massive wealth creation that took place through 2020 and 2021.
Now people are having to recalculate their ability to retire early and fund a comfortable retirement lifestyle. They will be forced back into the labor market. And the problem with a recession of course is that there are going to be fewer job openings, which means the unemployment rate is going to rise. The Fed is already telling us we’re going to 4.6%, which itself is a recession call; we’re going to blow through that number. All this plays out in the labor market not necessarily through job loss, but it’s going to force people to go back and look for a job. The unemployment rate goes up — that has a lag impact on nominal wages and that is going to be another factor that will curtail consumer spending, which is 70% of the economy.
“ My strongest conviction is the 30-year Treasury bond. ”
At some point, we’re going to have to have some sort of positive shock that will arrest the decline. The cycle is the cycle and what dominates the cycle are interest rates. At some point we get the recessionary pressures, inflation melts, the Fed will have successfully reset asset values to more normal levels, and we will be in a different monetary policy cycle by the second half of 2024 that will breathe life into the economy and we’ll be off to a recovery phase, which the market will start to discount later in 2023. Nothing here is permanent. It’s about interest rates, liquidity and the yield curve that has played out before.
MarketWatch: Where do you advise investors to put their money now, and why?
Rosenberg: My strongest conviction is the 30-year Treasury bond TMUBMUSD30Y, 3.674%.
The Fed will cut rates and you’ll get the biggest decline in yields at the short end. But in terms of bond prices and the total return potential, it’s at the long end of the curve. Bond yields always go down in a recession. Inflation is going to fall more quickly than is generally anticipated. Recession and disinflation are powerful forces for the long end of the Treasury curve.
As the Fed pauses and then pivots — and this Volcker-like tightening is not permanent — other central banks around the world are going to play catch up, and that is going to undercut the U.S. dollar DXY, +0.70%.
There are few better hedges against a U.S. dollar reversal than gold. On top of that, cryptocurrency has been exposed as being far too volatile to be part of any asset mix. It’s fun to trade, but crypto is not an investment. The crypto craze — fund flows directed to bitcoin BTCUSD, +0.35%
and the like — drained the gold price by more than $200 an ounce.
“ Buy companies that provide the goods and services that people need – not what they want. ”
I’m bullish on gold GC00, +0.22%
– physical gold — bullish on bonds, and within the stock market, under the proviso that we have a recession, you want to ensure you are invested in sectors with the lowest possible correlation to GDP growth.
Invest in 2023 the same way you’re going to be living life — in a period of frugality. Buy companies that provide the goods and services that people need – not what they want. Consumer staples, not consumer cyclicals. Utilities. Health care. I look at Apple as a cyclical consumer products company, but Microsoft is a defensive growth technology company.
You want to be buying essentials, staples, things you need. When I look at Microsoft MSFT, -0.61%,
Alphabet GOOGL, -1.79%,
Amazon AMZN, -1.17%,
they are what I would consider to be defensive growth stocks and at some point this year, they will deserve to be garnering a very strong look for the next cycle.
You also want to invest in areas with a secular growth tailwind. For example, military budgets are rising in every part of the world and that plays right into defense/aerospace stocks. Food security, whether it’s food producers, anything related to agriculture, is an area you ought to be invested in.
You want to be in defensive areas with strong balance sheets, earnings visibility, solid dividend yields and dividend payout ratios. If you follow that you’ll do just fine. I just think you’ll do far better if you have a healthy allocation to long-term bonds and gold. Gold finished 2022 unchanged, in a year when flat was the new up.
In terms of the relative weighting, that’s a personal choice but I would say to focus on defensive sectors with zero or low correlation to GDP, a laddered bond portfolio if you want to play it safe, or just the long bond, and physical gold. Also, the Dogs of the Dow fits the screening for strong balance sheets, strong dividend payout ratios and a nice starting yield. The Dogs outperformed in 2022, and 2023 will be much the same. That’s the strategy for 2023.
TOKYO (AP) — Asian shares were mostly lower on Wednesday following another volatile day on Wall Street, as traders braced for updates on inflation and corporate earnings.
South Korea’s Kospi 180721, +0.34%
lost 0.1% to 2,189.86 after the Bank of Korea raised its key rate by 0.5 percentage point, amid the backdrop of Fed rate hikes in the U.S. and growing inflation risks from the weak won and rebounding global oil prices.
In currency trading the Japanese yen declined to a 24-year low against the U.S. dollar JPYUSD, -0.24
at 146 yen-levels, raising expectations of another intervention by Tokyo to prop up the yen. By midday the dollar USDJPY, +0.24%
was at 146.17 yen, up from 145.80 late Tuesday. The euro EURUSD, +0.12%
cost 96.96 cents, inching down from 97.07 yen.
The weaker yen raises costs for both consumers and businesses who rely on imports of food, fuel and other needs, but the bigger purchasing power for foreign currencies is expected to boost tourism. Japan reopened fully to individual tourist travel this week after being closed for more than two years because of the pandemic.
Japan’s benchmark Nikkei 225 lost 0.2% to 26,348.73 in morning trading. Australia’s S&P/ASX 200 ASX10000, -1.54%
gained nearly 0.2% to 6,656.00. Hong Kong’s Hang Seng slipped 2% to 16,491.39, while the Shanghai Composite shed 1.2% to 2,943.24.
On Tuesday, the S&P 500 SPX, -0.65%
fell 0.7%, marking its fifth straight loss, closing at 3,588.84. The Nasdaq COMP, -1.10%
dropped 1.1% to 10,426.19. The Dow Jones Industrial Average DJIA, +0.12%
added 0.1% to 29,239.19, while the Russell 2000 index RUT, +0.06%
rose 1 point, or about 0.1%, to 1,692.92.
Recession fears have been weighing heavily on markets as stubbornly hot inflation burns businesses and consumers. Economic growth has been slowing as consumers temper spending and the Federal Reserve and other central banks raise interest rates.
The International Monetary Fund on Tuesday cut its forecast for global economic growth in 2023 to 2.7%, down from the 2.9% it had estimated in July. The cut comes as Europe faces a particularly high risk of a recession with energy costs soaring amid Russia’s invasion of Ukraine.
Wall Street is closely watching the Federal Reserve as it continues to aggressively raise its benchmark interest rate to make borrowing more expensive and slow economic growth. The goal is to cool inflation, but the strategy carries the risk of slowing the economy too much and pushing it into a recession.
“The market desperately wants a reason for the Fed to be able to stop tightening and the data recently hasn’t given them that opening with respect to inflation,” said Willie Delwiche, investment strategist at All Star Charts.
Computer-chip manufacturers continued slipping in the wake of the U.S. government’s decision to tighten export controls on semiconductors and chip manufacturing equipment to China. Qualcomm QCOM, -3.99%
fell 4%.
Investors still expect the Fed to raise its overnight rate by three-quarters of a percentage point next month, the fourth such increase. That’s triple the usual amount, and would bring the rate up to a range of 3.75% to 4%. It started the year at virtually zero.
The government will also release its report on wholesale prices Wednesday, providing an update on how inflation is hitting businesses. The closely watched report on consumer prices will be released on Thursday, and a report on retail sales is due Friday.
“Everyone is still hoping that every inflation report will be the one that shows that pressure is alleviating,” Delwiche said.
Wall Street is also gearing up for the start of the latest corporate earnings reporting season, which could provide a clearer picture of inflation’s impact.
Among the companies reporting quarterly results this week: PepsiCo PEP, +0.48%,
Delta Air Lines DAL, -1.97%
and Domino’s Pizza DPZ, -1.99%.
Banks including Citigroup C, -2.76%
and JPMorgan Chase JPM, -2.89%
will also report results.
In energy trading, benchmark U.S. crude CL00, -0.75%
lost 82 cents to $88.53 a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude-oil prices fell 2% Tuesday. Brent crude BRN00, -0.56%,
the international pricing standard, fell 62 cents to $93.67 a barrel.
