Market & Trade

Last week was the third of a slow, shuffling decline in the stockmarket. From last month's high of 106.9 the Dow-Jones average of industrial stocks listed on the New York Exchange had sunk to 92. U. S. Steel was down from a 1934 high of $59 to $42, General Motors from $42 to $31, Baltimore & Ohio R. R. from $34 to $21, Allied Chemical from $160 to $133. Weakened by a thrice-pared dividend and rate-reduction threats, the leading power & light stock, Consolidated Gas, was selling near its Bear Market low of $31.50. Chart-watchers had ruefully eyed prices slipping through the March lows, through the December lows, finally fetching up around the levels of last October. As these "resistance points" cracked under heavy selling last week, market pundits began to predict a reversal in the major upward swing which started not with New Deal but on July 8, 1932. Yet the steel industry last week was operating at 60% of capacity--highest level since September 1930. April cigaret-production set an all-time record. American Telephone & Telegraph reported a net gain of 156,000 telephones in use for the first four months of the year against a net loss of 340,000 in the same period of last year. International Harvester reported its business for the five months through April amounted to $38,400,000 against $14,300,000 in a like period a year ago. The Dow-Jones average of prime railroad bonds was above 100 for the first time since it was compiled nearly 20 years ago. To silver talk in Washington and rocketing grain markets in Chicago, the stock-market gave scant heed. Behind this paradox of rising business and falling stocks bulked one large fact: the indexes of trade are written in the past tense. By last week John Businessman was ready to admit that the swift pace of the spring advance had definitely slackened. For the stockmarket's sorry performance inflationists blamed dollar stabilization and brokers blamed the threat of regulation. But more disinterested observers laid it to the flattening curve on the business chart. Trade was still far above last year but the amazing Easter retail boom had tapered off. The drought-inspired rise in commodities was more than offset by fear of a staggering drop in farmers' incomes. Power production was well above the same week of 1933 but a 2% decrease from the previous week was more than seasonal. Automobile production was still setting "not since" records, but Detroit was thick with reports that the industry had overshot demand. General Motors' retail sales in April were 48% above the same month last year but the March-April gain was only 8% against an eight-year average of 29%. Motormen began to suspect that not consumer demand but fear of such strikes as occurred last week in the Fisher Body plant had piled their desks high with orders from nervous dealers. The shifting wind in Detroit cooled Pittsburgh because automobile plants are steel's best customers. Furnaces grew hotter last week but the price of scrap steel was weak. More than one-half of all new steel is made from old steel, and the price of scrap, which steelmen must buy in advance, is regarded as an almost infallible index of steel's near-term future. From a high of $13 per ton in March Iron Age's composite scrap price has dipped to $11.92.

As everyone knows, President Roosevelt and his advisers have long expected a good, healthy summer slump on the heels of the spring gains. If Recovery is a fact the summer slump should be followed by a brisk autumn rise. An unseasonal spurt like last summer's, the Administration feels, is more to be dreaded than desired.

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