Evening star., 1923-06-28
AFTERNOON RALLY
FOLLOWS SLUMP
Short Covering and Other
Buying Brings Stocks Up
From Days Lows.
BY STUART T.. WEST.

BY STUART =. WEST.
Special Dispatch TO The Star.
NEW YORK, June 2S-The market
started in this morning about where
it left off yesterday. but after a Pc
riod of sharp selling real rally set
in. For a half hour or so after the
opening there was an irregular re-
covery, but a feeble one. 1t was not
enough to intimidate the bear party,
but, on the contrary, this element, in
sisting that the buying power was
weak, returned to the attack. Be-
fore midday the selling had once
more becomes general with many
prominent issues at new lows for the
year.
support Mt Lower Levels.
Steel common continued, as it had
the previous day. to show resistance
as 1t approached 80. Studebaker was
again well taken around par by peo-
pie who We're attracted by the 10 per
cent yield promised at that figure.
Chandler Motor broke to a n"w low
before 1t ran into buying orders of
a substantial character. Baldwin
Locomotive after selling at 120-a
point up from last night-was driven
down sharply to new low for 1928.
Anaconda got beneath 80 for the first
time and the sugar stocks were soft,
with Punta Allegro below so and Cuba
Cane preferred off "a points from its
March high.
Strong Afternoon Rally.
This was the record of the first two
hours of trading, but the early after
noon rally was more vigorous than
any seen this week. 1t was most
pronounced, of course. in stocks in
which the bears had been most active,
,ak,
ground for assuming the largest short
intcre@ts-stocks like American Can,
Corn Products, Steel common, Stude-
baker, Baldwin Locomotive and some
of the oils.
1t did not take fifteen minutes for
these stocks to shoot up 1l2 to 2
points Chandler Motors easily re-
gained the ground lost in the early
trading. Department and chain store
issues. which have stood up almost
the best of any during the break. were
conSpicuously strong, especially AS
socia ted Dry Goods and Woolworth
Leading rails. such as Union Pacific
and New York Central, came back a
point or more readily.
Today's Review and Outlook.
How much significance was to be
attached to the days recovery is
something the immediate future will
decide. But clearly the check to the
appearance of enough substantial
buying to intimidate professionals
working on the short side and induce
them to hurriedly take in a portion
of their contracts.
Speculative Wall street. which a
week ago got absurdly upset by the
stock exchange failures, has this
week lost its head over "bearish" pre-
ditions put forth with no accom-
panying reasons. but simply on the
unsupported authority of those who
make them. One day an advisory bu-
reau, which all the way down has
been urging its followers to hold on
to their stocks, suddenly reverses its
position. Another day some profess
Sional operator or other is reputed to
have painted a dark picture of the
financial outlook. The crowd in Wall
street seized upon these things as OF
more consequence than the express
Sions of responsible business leaders,
including the heads OF the Federal
Reserve Board. They do not stop to
calmly analyze fundamental condi-
tions. but allow themselves to become
worked up into a panic without any
intelligent reason.
Trade Conditions Good.
The best informed authority on busi-
ness conditions is undoubtedly the Fed
eral Reserve Board at Washington. 1t
gathers in its data from all over the
country and from the most authentic
sources. Its monthly summary appear
ing in the dispatches this morning GER
tainly strikes no note of alarm. On the
contrary, it does not support the i'm
preston that there may have been some
further let-downs in trade activity. The
fact ts-the review points out-that the
volume of both wholesale and retail
trade was larger last month than the
month before, the index of the whole
sale trade being 5 per cent above April
and IA per cent above May, 1922. Pro-
duction rose per cent during May
in such representative lines as iron and
steel. cement and petroleum, but on
the other hand consumption was we'll
sustained. The mills taking of cotton,
for example, being close to maximum.
Overproduction Only in Oils.
1t will be said that the stock mar
ket is not interested SO much in this
description of past conditions as in
the question of what is going to hap
pen in outside business from now on.
The point, however, about this testi-
mony of the federal board is that
it does not disclose any element in
the present trade situation which in
the past has denoted danger. The
two principal antecedents of former
periods of depression have been
either a credit overstrain or indus
trial .overproduction or both. Not
even the most pessimistic will con-
tend about the situation, now that
credit has been unduly extended or
there is any likelihood of pinch.
The whole question is whether or
not output of goods will prove to
have outgrown consumption. OF this
there Is no evidence as yet outside
the oil industry.
Wage Conditions Discussed.
The statement has been made re-
peatedly from the highest sources
that there has been no over stocking
by merchants and manufacturers and
1t is pretty fully granted that the
danger of price imitation as 1T stood
three months has been removed.
Wages in certain lines have gone up
extravagantly and this has reduced
profit margins as compared with
what they were last winter. But on
the other hand so long as the COM
modify prices level has ceased rising
there is no reason to assume that we
shall see again the vicious cycle of
lSl9-20 where a constant series of
price increases was beginning a con-
slant series of wage increases
MARKET CLOSES STRONG,