The Big Shakeout

The stock market, which has been as unsteady as a hog on ice, last week again fell hard. The Dow-Jones industrial average dropped five points to 270.73, a low point for the year. Down with it went the rail and utility averages. Investors sold not only because they were worried over economic adjustments which peace in Korea might bring; they also began to jitter--with little cause--that the vast outpourings of civilian goods would soon pile up big surpluses and bring cutbacks in production.

The six-week shakeout in the market was the worst since the start of the Korean war. The Dow-Jones industrial average, which hit a bull-market peak of 293.79 in January and stayed close to there until March, was down 23 points from the high. The drop canceled out all of the gain of the post-election "Eisenhower boom," and put the average right back to where it was Nov. 6. But while the drop was big, the market itself was still high, e.g., at last week's low the industrial average was still 58 points above the 1946 peak of World War II's bull market. And there were signs, as prices firmed up at week's end, that the worst of the shakeout might be over. The biggest encouragement was the spate of rosy first-quarter earnings reports (see below).

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