New High

In Wall Street inflation continued on its course last week--the public paid more & more money for what it got. And lots of people, in buying stocks, were betting that inflation cannot be checked, that prices will keep on going up. On the New York Stock Exchange, the Dow-Jones industrial average crept upward to 143.68, highest since May 1940; the utilities hit a new high of 21.35; railroads were close to their May peak. Last month was the busiest June in five years. Ahead were July and August, which have shown rising markets two years out of three for 50-odd years.

All this looked good to commission-hungry brokers. But what looked better was the leashing of the "cats & dogs" (stocks selling under $5). The dogs had scampered ahead for months (TIME, March 15). Small-lot customers were sure they were bargains because they were cheap. But since many a $2 dog is overpriced at that level, brokers had eyed the bad bargain boom in real anxiety.

But last week the blue chips and the medium-priced stocks were hot. Day after day U.S. Steel shouldered its way into the list. Other blue chips, Westinghouse Electric, General Mills, Monsanto Chemical, reached new highs. Most top blue chips had gained ten points since the start of the year. The war-rich public was spending in the market the cash it could not spend elsewhere. And many a buyer was learning a stock could be a better value at $50 than at $2.

War & Peace. Rumors of a fairly quick end to the war have prodded the boom. Last winter, the peace stocks (soft drinks, baking, retail trade, gold mining) lagged behind the striding war stocks (railroads, airplanes, steel, shipbuilding). But with spring--and victory in North Africa--war stocks stood still, peace stocks forged ahead. The peace boom seemed premature; peace and war stocks were reaching an unhealthy unbalance.

Then last week, as peace stocks forged ahead to a new peak, war stocks took their sharpest hop in two months, to come more in line with realities.

Wall Street worrywarts were still unhappy. While many were betting that prices would keep on going up, some shrewd ones had kept a way out open: the short interest was now close to 1,000,000 shares, the highest in five years. The greater market activity this year was bound to increase the short interest. But to Wall Streeters the meaning was plain: a dangerously large number of persons think the 14-month bull market is in for some stormy weather.

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