A Change of View

Wall Street, which has taken a dim view of the economic outlook, last week showed signs of changing its mind. In midweek, a flurry in oil stocks touched off a general wave of buying. As market prices rose, the volume of trading swelled. By the time the Exchange closed, 1,350,000 shares had changed hands and 826 separate issues had scored gains. The Dow-Jones industrial average had risen over 3.5 points to 174.68, the best day's gain since last December. The market continued the rise until, by week's end, the industrial average was at 175.49. What particularly pleased chartists was that the market had broken through the industrial highs of May. To the optimistic, at least, this was evidence that the bear market was tiring itself out.

Tired Bear? As usual, there was no agreement on the cause of the upsurge. Some thought that the market was simply "oversold," therefore unduly sensitive to any demand. At the other extreme was the New York Herald Tribune's C. Norman Stabler. Stabler taunted those "prophets of gloom who have been . . . ignoring the fact that securities have already been depressed to the point where they have figuratively discounted everything short of collapse. . . . While the [Dow] theorists are waiting [for more proof that the bear market is over], the market may be taken away from them by those who are looking at assets and earning power."

He had a talking point. First-quarter cash dividends of reporting corporations amounted to $1,117,500,000, the highest quarterly payments ever recorded by the Department of Commerce. The Administration's talk of foreign spending had also contributed to the new optimism (see Foreign Trade). But most Wall Streeters preferred to take their optimism with a dash of caution. Nevertheless, they were willing to concede that the recession, now that it had started in some industries, was not as fearsome as expected.

Hungry Consumers. Where business had dropped, the slip was gradual enough, and businessmen were ready for it. Although the public still kicked about high prices, it went right on buying. Employment, after a drop in April, had risen again to an alltime peak (58,300,000) in May, due chiefly to seasonal agriculture work. Retail sales, which had slumped in spring, were now holding up better than retailers had expected.

But nowhere was there greater jangling of cash than on the nation's meat markets. Though the per capita supply of meat (153 lbs.) was at a 35-year high, meat prices last week soared above wartime black-market levels. (In Chicago, average prices of beef on the hoof were at an all-time peak.) There had been no drop in the number of cattle slaughtered. Cattle receipts at Chicago were 63% higher than a year ago. The only explanation advanced by packers was that consumers were just buying more meat. Looking at all this, businessmen began to wonder if they had not underestimated the enormous demand for goods that still exists.

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