Alarms and Excursions

The New York Stock Exchange was sagging gently along early last week, when suddenly the news ticker flashed: "Unidentified planes two hours away...." Later, a huge siren near the old Treasury Building, right across the street, went off with an awful wail. On the trading floor men wheeled, dashed for the trading posts, frantically dumped thousands of shares of stock for whatever they would bring. This done, many of them high-tailed for office or home. When the all-clear sounded 17 minutes later, leading stocks had lost 2 to 10 points, the market was at a new four-year low.

Next day brokers kicked themselves for getting the jitters, sheepishly started buying stocks back. By the time the Tokyo radio reported New York bombed and the Stock Exchange closed, stocks had gone into a sharp rally. At week's end, they had recovered most of their losses.

The bond market took fright briefly too. Traditionally stable U.S. Government bonds (which rarely move more than 1/4 point daily), dropped so fast that it took joint Treasury Department-Federal Reserve System buying to stop the rout. As usual, Treasury officials refused to say how many bonds they had bought. But the Federal Reserve weekly report showed that 16 member banks had bought $38,000,000 in "Governments," thus boosting total holdings to $3,378,000,000--a new high record. The tactic was successful, since the bonds were above par at week's end. Cracked one dealer in Governments: "If the Treasury will take care of false air-raid alarms, we will take care of the Government bond market."

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