The New York herald., 1922-06-28
FINANCIAL NEWS
AND COMMENT
Mex Pete Declines 90 Points,
Carrying Rest of List to
Lower Levels.

A sharp reaction in stocks yesterday
was the outstanding feature of the
financial markets. The expected hap
pened. Mexican Petroleum, having been
bid up in a sensational way largely on
the strength of an overcrowded short
interest. broke badly, declining some 90
points from the days best figure and
more than 25 points from the high mark
established only the day before. 1t was
a crumbling of values such as is seldom
witnessed and which does more harm, to
the stock market than any other single
thing, unless it is. perhaps. the sharp
advance which usually precedes a bad
break of that character. 1t was just
such break in Mexican Petroleum that
the financial community was looking for,
although no one dared to even guess
when it would come or to what extent it
would go. The one sure thing was that
it would come and it was this certainty
OF disaster that kept traders out of the
market and made recent sessions the
duh affairs that they have been.
All sorts of stories and rumors were
in circulation concerning the decline, but
they were probably as correct as most
of those rumors usually are. The real
fact behind the decline was that Mexican
Petroleum had advanced altogether too
far in too short space of time and 1t
has been the history of violent moves of
that sort that a break. and a bad one.
will come. Probably a large part of the
short interest had been eliminated on
the way up; while at the same time the
confidence of the public had been greatly
shaken and what little buying might
have come into the market for the
shares in the ordinary course was fright
ened away by the sensational activities
OF the stock in the last few days. A
movement of the kind experienced by
Mexican Petroleum always has been and
probably always will be unhealthy for
the market in general.
Few stocks stood up in the face of-the
heavy selling which the debacle in Mex
Pete induced. Declines were the rule in
the entire list, running from small frac-
in some of the active speculative favor
ties. Some of the rails stood out by
reason of their resistance to the general
downward trend, but even these, with
one or two exceptions suffered losses
on the day. Union Pacific was a notable
feature with a gain of more than a point
! and a recession in the late selling of only
Is.
The tightness of call money continued
to be a disturbing factor to traders but
those who analysed the situation care
| fully were able to see with no difficulty
that the higher rate merely reflected a
| temporary condition rather than de-
finite turn in the credit situation. Time
money was unchanged at per cent. for
| short term and AZ for long term bor-
rowings, although the call rate remained
at the renewal quotation of per cent.
most of the day. Just before the close
there was a recession of u of one per
cent. The frmness of bonds was an
other indication that there is nothing
changed in the fundamental money situa-
| tion. Bond dealings were comparatively
small and within narrow limits. The
Government issues held well around their
topmost levels.
A sharp upturn in cotton was not un-
expected after the breaks of recent days
which had extended to from $40 to $12
a bale. An improved technical position
coupled with profit taking by shorts
aided the market materially. Selling n
the close in anticipation of a bearisr
weather report brought about a reces
sion from the days best prices. For
. eign exchanges fluctuated within narrow
limits on limited dealings. Claims O
deterioration of the wheat crop resulted
in sharp upturn of values in that mar
ltat