Viewed Without Alarm

The news of President Eisenhower's illness (see NATIONAL AFFAIRS) hit Wall Street barely an hour before the opening trading gong. At the first sketchy reports, there was a burst of selling while traders waited anxiously for more complete word on the President's condition. As it came, the market hung on the doctor's bulletins. When news reached Wall Street at midday that Ike was headed for the hospital in an ambulance, there was a rush to sell. The ticker ran five minutes late, and the Dow-Jones industrial average dropped 15 points. But later, when Ike's illness was diagnosed as intestinal trouble having nothing to do with the heart, Wall Street was quick to reverse itself.

By 3:09 p.m. the tape once again fell behind, but this time it could not keep up with buying orders as confident rallies rolled across the Big Board. At the final closing some 50% of the loss had been regained; Dow-Jones industrials wound up 7.70 points lower at 475.29, but still some 6.48 points higher than the low reached in the May market adjustment. The drop bore little resemblance to the Cardiac Break last September. Few big investors had sold; trading was largely by smaller shareholders. Even so, losses were only a fraction of September 26th's staggering 31 points, and trading volume of 3.6 million shares was half the 7,720,000 shares traded during the Cardiac Break.

"No One's Changing." Regardless of the market's oscillations, U.S. businessmen seemed to view the presidential illness without alarm. Said Los Angeles Stock Exchange Vice Chairman Frank E. Naley: "If his recovery is rapid and complete, there should be no letup in the record industrial expansion. A slow recovery or a decision to withdraw from politics could possibly cause some hesitation, but would not stop the expansion program. The momentum is too great." Added Inland Steel's President Joseph L. Block: "Over the long range, no one man's health can have much effect. The forces in the economy are too powerful." Said the world's biggest banker. President S. Clark Beise of the Bank of America: "We will all carry on and everything will run in the same way. We shouldn't overplay any small health problem that may occur." Echoed Blyth & Co.'s President Charles R. Blyth: "No one's changing plans."

The businessmen had statistics to bolster their words. From the Federal Reserve last week came a continued gentle easing of credit in the form of Treasury bill purchases totaling $116.7 million. The Government reported that new investment in plant and equipment was still clipping along at a record rate of $34.8 billion in 1956's second quarter and would reach a rate of $36.7 billion in the third quarter, both far above the first-quarter rate of $32.8 billion annually. Employment was still rising, hit a seasonal record of 65 million in May, while personal income soared to a peak of $317 billion, up $2 billion from March. Unemployment was steady at 2.6 million, unchanged from April. Department-store sales for May were 6% higher than last year, while overall sales for 1956 to date are 3% ahead of 1955.

Out of the Blizzard. The trouble-beset auto industry seemed to be finally digging itself out of the blizzard of unsold 1956 models. Final figures for May showed new car inventories at 800,000 units, down 70,000 from April. With June production scheduled for only 446,000 units, some 3% less than June 1955, automakers expect to cut inventories another 100,000 by the first of July. Led by Chevrolet, which has sold a whopping 822,729 cars and trucks in 1956's first five months, only 820 fewer than the 1955 record, many companies reported sharp sales spurts in the last ten days of May. Across the U.S., dealers were hoping that both the bad spring weather and their customers' sales resistance had blown themselves out.

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