Going Down

Like air show spectators wondering apprehensively when a plummeting sky diver will trigger his parachute, Wall Street's experts were still waiting for the stock market to level out. But last week was not the week. After starting off with a strong rally, the greatest bull market of all time weakened and fell in the last three days to end the week at 433.83 on the Dow-Jones industrial average, the lowest point in 2 1/2 years. All told, 263 stocks, among them such blue chips as Du Pont, General Motors and Alcoa, reached new lows for the year.

The continuing market decline was due in part to gloomy news from the unstable Middle East, but most traders thought that a far more disquieting factor was an increasingly bearish view of business prospects in the eyes of many an investor. Business is still rolling along at the highest level in history; jobs were at a steady peak in September despite layoffs in the aircraft industry (see below); and retailers were predicting record sales for the rest of the year. Yet there was enough disturbing news on the nation's economic front last week to reinforce fears that 1957's fourth quarter, while good by most normal standards, might not be up to the ever-rising boom-time standards the U.S. has come to expect. Personal income dropped off for the first time since January 1956; department-store sales across the country were off 1% for the week, and carloadings showed a decline. The rate of business failures for the first half was higher than in 1956, and industrial output for September declined.

Keeping a careful eye on the indexes, the Federal Reserve saw no cause for alarm, nor did it see any reason to spur business by easing its tight money policy -at least for the moment. The Fed has helped to check inflation, said President Alfred Hayes of New York's Federal Reserve Bank, but it cannot risk relaxing credit restrictions while living costs continue "their seemingly inexorable rise." When the proper time comes, said Hayes, the Fed will "work the other side of the street." As for businessmen, General Electric President Ralph Cordiner reflected the feelings of many when he reminded the U.S. that it rests on an unparalleled economic plateau. Said Cordiner: "There are at least four long-term forces at work to reassure us as to the underlying strength of the economy -the needs of a growing population; the conduct of research and development on a large scale; the rising levels of income, and the tremendous opportunity offered by worldwide industrialization."

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