New High in Stocks

To Wall Street, the message of the steelmen and statisticians came loud and clear. In heavy trading that time and again left the high-speed ticker behind, National Steel gained 5 1/4 points (to a new high of 84), U.S. Steel picked up 4 5/8 (to 944), Bethlehem, Armco and Youngstown all ran higher. And with them went the market. By week's end, shares on the Dow-Jones industrial average had gained 14.24 points to reach a new peak: 602.21, and a level nearly 40% higher than the recession low of 16 months ago.

The market was almost there a month ago, but fell back. At that time it had hit 601.74 on an intraday basis, then retreated to the 590s. The quick push-pull led the experts to talk about the possibility of a sharp selloff ahead, of "technical corrections," "testing lows," etc., etc. After that, it did indeed slip some 30 points. But it resumed its climb, with hardly a thought to the worriers.

There was still talk that stocks were rising because they were a hedge against inflation. Yet in the last six months there has been almost no inflationary increase. More important to market traders was the gain in industrial activity, and the flood of bright earnings reports and stock splits that accompanied it.

Only the most bearish investor could ignore a key theme running through the 1958 fourth quarter and year-end reports. It was the salutary effect of a new drive for efficiency and productivity. A few years ago, declining sales usually meant a decline in profits. But now many a company can post smart profits even when sales dip. Goodyear Tire & Rubber was down 3.8% in sales for 1958, yet managed to hit record profits, up 2% to $6.08 per share. After a poor third quarter, Reynolds Metals did so well in the last quarter that it actually increased its full-year earnings slightly, to $3.25 per share. Du Pont had the best fourth quarter in three years, with profits 20% better than the same quarter of 1957, while Textron's net jumped 24% to a record $2.51 per share.

To top it off, half a dozen companies weighed in with stock splits and higher dividends. Rocket enginemaker Thiokol Chemical Corp., drugmaker Chas. Pfizer and Colgate-Palmolive split three for one, Lily-Tulip Cup two for one. Eastman Kodak, whose stock has nearly doubled in value, to $152.50 a share in the last two years, voted a new share of stock for each one held, then tacked another 9-c- per share onto its dividend. With that kind of news last week, who could blame anyone for buying a share of U.S. industry?

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