The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-03
FINANCIAL NEWS
AND COMMENT
Rally in Stock Market Carried
Further by Industrials. and
Rails Keep Pace.
OLD LINE ISSUES ACTIVE
Clearing House Statement Dis
\ closes Over $r1,O00,000
Reserve Deficit.
OLD LINE ISSUES ACTIVE

The rally in the stock market was
carried materially further in industrials
during yesterdays short session, and
rails again kept pace with them. But. as
before, there was nothing to indicate that
the movement was based on anything
more than short covering. The market
had become oversold during the weeks
selling, and II was apparent to traders
that part of the short interest would have
to be eliminated II any further progress
on the down side was TO be made In in
dustrials. There were also indications
that rails also were nearing a point
where they would be oYerbought. The
movement. for instance. was altogether
too rapid yesterday TO last but an
even better indication that selling was
taking place was the fact that the stocks
which were picked out yesterday by
traders were stocks that usually are the
last to participate in a rising movement
That the situation was unchanged in
so far as the industrial stocks were
concerned was seen through the fact
that the rise not only was based on
short covering, but that 1t took place
without any change whatever In the
character OF the news. There were fur
Their cuts in prices of various commod-
tiles. but the big development which
the Street is looking forward TO- the cut
in steel prices. did not materialize. The
Homecoming of Judge Gary this week Is
still being looked forward to as the turn
ing point for the steel industry. and
Wall Street Is continuing to watch the
news from the independent steel centres
for indications Of reductions in prices,
but so far nothing has materialized
That the reduction will have to come
soon. however. was indicated by the pub
lication yesterday of preliminary esti-
mates Of the monthly tonnage state
ment of the Steel Corporation. 1t was
estimated that the booking would show
a decrease of more than 5000 tons,
and in that connection Wall Street is
doubtful whether or not the independ-
ents. whose prices are higher than those
of the Steel Corporation, will make even
as good showing.
Although industrials participated in
the rise. 1t was really rails which fur
nished the fireworks of the trading. All
CT the old line stocks were active and
strong again, but their actions. in the
opinion of many observers, indicated
that the rails were nearing q point
where a temporary setback might be ex-
pected. In the industrials there WAS
very little interest outside of a few
stocks of the type of Baldwin, which
every time they rallied. and even those
rallies were feeble affairs In compari-
son with the decline that has taken
place. As on Friday. the motors were
irclined to do better than the general
run of stocks. There was excellent de-
Inand for General Motors Studebaker
and Chandler. indicating that selling in
that class of stocks had been much
overdone
The Clearing House bank statement
disclosed a deficit in reserve OF more
than 81. 200, 900. a s35. 900, 900 shrink
age for the week. due to a loss of cash
by member banks to the Reserve Bank
of approximately that amount. The
Significance of this unexpected drop
lies in the fact that previous deficits
this year have been the signal for re-
newed liquidation of stocks. Another
feature OF the Clearing House state
nent was the drop Of $500 900 in time
deposits. suggesting that corporations,
TO meet business reimbursement. were
forced not only to do financing but &c
draw on their banking facilities. Loans
expanded nearly $25.000,000. United
States deposits amounted to nearly
$3.50. 900 at the close of business on
Friday, and bankers look for extensive
withdra walls this week. Without lend
ing any assistance to the Clearing
House banks, the Reserve Bank re-
ported a drop in the ratio of total re-
serves to deposit and Federal reserve
net liabilities combined from All per
cent. to ALI per cent, and in the ratio
of reserves to net deposits. after de-
Quoting 40 per cent for gold against
notes in circulation. from 4s.4 per cent.
to 426 per cent. Another feature of the
statement was the expansion OF $11 .000.-
600 in Federal reserve notes. suggesting
a rising demand for credit