The Old Fever

WALL STREET

In Wall Street, there was a touch of the old fever. Three days in a row the roaring stockmarket pushed sales up to more than 2,000,000 shares. In one wild last hour's trading, 800,000 shares changed hands. Twice the high speed ticker fell behind. Result: the Dow-Jones industrial averages soared to 156.68, highest since the war-begotten boomlet of September 1939. The rail averages kept pace with them. At 51.35, railroad stocks were at their peak since 1937, when the last big bull market fell on its face.

To market dopesters, this was the long-awaited statistical proof that the boom was finally on. Typical item: Graham-Paige, which less than a year ago went begging at 1 1/4, was frantically grabbed at 7 1/4, at week's end was second on the list in shares traded.

Inflation Ahead? This time the reason for the boom was plain: "Everybody has too much money." Everybody was also trying to hedge against inflation. A few weeks ago, traders were willing to bet that the line against inflation could be held. But last week, eyeing the boost in steel prices and textile wages--and the threatened cutbacks in civilian production--they sank their cash in common stocks and, in effect, bet that they would keep rising along with any general rise in prices.

Fresh cash came into the market from bondholders, who were also shifting their money into common stocks. At high prices, bond yields are close to record lows. Barren's noted that the ten "highest grade bonds" on its index paid only 2.6% interest. Any broker could rattle off a string of common stocks paying upwards of 5%.

There was also talk of another source of fresh money, the estimated $10 billion a year once bet on horse racing. Wall Streeters coldly disclaimed any relationship between horse betting and speculative stock buying, indignantly denied that racetrack cash was coming into the market. But in Los Angeles stock buying spurted when nearby tracks were shut down. Many a buyer paid off in the kind of currency frequently seen at tracks, rarely in brokerage offices--$1,000 bills.

Trouble Ahead? There was no doubt that much of the buying was by amateurs. The blue chips, doted on by professionals, moved up sedately, while the cats & dogs (cheap stocks) frolicked, pets of the public. Actually, the secondary boom in cheap stocks, which began last July (see cut), as yet caused little worry. Most of the buying was for cash and investment, at least, until there were new cars, refrigerators, etc. to buy. But it was a barometer of trouble to come. The public, which was now coming into the market rapidly, would leave just as rapidly if it got burned, taking the boom with it. Still, the bait was enticing.

How long would the bull market last? Most brokers shook off these questions with some of their own: How much more inflation will the U.S. have? How long will the war last?

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