Market Break

After nosing down for the past two months, the stock market last week suffered the sharpest drop since the break following President Eisenhower's heart attack two years ago. In the opening session, Dow-Jones industrials slid 9.46 points, and by midweek they dipped a point under the year's intraday low of 453.07 set in February. Then the bargain hunters moved in, and buying was so strong that the ticker fell behind as one session finished. At week's end, prices were recovering; then they suddenly faltered and closed at 456.89--off 11.53 points for the week.

Wall Streeters blamed much of the break on general uncertainty about business. As for the end-of-the-week fall, professionals pointed to a sudden announcement that Standard Oil Co. (NJ.) will seek to raise $250 million to $300 million in the market through a rights offering to its stockholders. Since Standard's action would dilute its shareholders' equity, Standard sold off 2 1/2 points, and other oils tumbled in sympathy. In its jittery mood the market was upset by any news--good or bad.

One encouraging sign was that whenever the Dow-Jones industrial average approached the 450 mark, there was a rush of buying and stocks bounded up. Actually, the average has dropped sharply to the 450-to-460 range five times in the past 15 months. Each time stocks have rallied strongly. Yet no one can say whether the line will hold now. The New York Times solemnly reported that if the averages pierce the lows either 1) heavy selling would start, or 2) heavy buying would start. Best guess of Wall Street's analysts: the market will continue to bob up and down in the 450-to-525 range for the rest of this year and through 1958, then take off on a steep climb. Said Leonard F. Howard, vice president of General American Investors Co.: "The stock market is going through a consolidation phase, and it will continue to back and fill for a year or more. For the investor the emphasis will be on selectivity."

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