Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-27
TREND UNCERTAIN
IN STOCK MARKET.
Conditions Indicate Less
Strength Than Is Shown
on Surface.
By CHARLES F. SPE.iRE.

DendlCular Oecllne OF IL pOlHlS III tHe
average price of stocks in the first
| half of August has been followed by
rise of similar proportions in the
second portion. A careful analysis
of the movements of both speculative
and investment shares, however, re-
veals the fact that the market is not
as strong as it seems. A great many
| issues that took part in the early
Summer rise have been abandoned.
| Others work back and forth languidly
| from day to day.
The opposite OF this situation is to
be found in the bond market. where
| there has been constant Improvement
during the month and where strong
technical position has replaced an un-
| healthy one. SO, while stocks appear
stronger than they really are, bonds
are actually flrmer than they seem
| to be.
Public Shows Caution.
Tho public's interest in the stock
market has become a concentrated
one. 1t has picked out a few of the
outstanding shares where there is no
risk attached to the purchase even
should the course of the market
eventually be downward. In some of
| this weeks sessions the trading in Gen.
|
been 80 per cent of the total turn
over. This is a good sign. 1t does
not, however, make for the sort of
situation that those who live on COM
| missions would like to see.
| The facts concerning the status Of
| the stock market may also be applied
to business. This is not so satisfac-
tory around and about the country
as it has been made to appear. There
are a number of signs that have be-
come more conspicuous lately, sug-
costing a contraction in the produc-
ton and distribution of goods and
commodities of fairly large proper
ton in some sections of the United
States.
| Steel Recovery Delayed.
There seems to be a tendency to
| postpone new enterprises and the
purchase of materials to a date in
the Fall which runs beyond the normal
time of seasonal recovery. This is
particularly true in the iron and steel
trade. 1t has been anticipated that
the end of August would witness free
buying on the part of large users of
steel products. However, the rail-
roads. the automobile manufacturers
and the builders have all been delay
ing their orders, possibly in the ex-
pectation that lower prices would fol-
low absence of demand.
| By far the most serious of all of
the trade conditions is that surround.
ing the production of crude oil, the
storing of the surplus product and
the marketing of the refined oils.
Almost no progress has been made in
correcting the conditions which have
caused decrease of about 45 per
cent in the aggregate earnings of
the companies that have reported for
the first half of the year and which
at the present rate will show a net
decrease for 1927 Of nearly 100000
600. This will mean not only that
more Oil company dividends must be
reduced or passed but that there will
| have to be a large amount of borrow
ing in order to store excess supplies.
There have been a number of efforts
to start movements in the stocks of
| the stronger oil companies, but no
encouragement for a continuation of
such operations can be found either
among producers or their bankers.
Barometer i'm Bank CIearings.
A fair measure of dislocation of
business is to be had in the record of
bank clearings throughout the coun-
try. Except in the centers Influenced
by the demands of speculation, these
are off materially. The reaction start
ed in the South. IN the first six
| months of 1927 the bank exchanges
of leading Florida cities shrank from
80 per cent to so per cent compared
with 1926. In the third week of Au-
gust clearingS in the Boston Federal
reserve district were off per cent,
but in the New York and Chicago dis
tricts they were IL and ga per cent
greater respectively, than last year.
However, in the remaining districts.
which are affected chiefly by indus
trial or agricultural conditions, the
following losses occurred:
Cleveland. 91a per cent; Richmond,
S12 per cent; Atlanta and st. Louis,
90 per cent; Minneapolis, about Z per
cent; Kansas City, 10.6; Dallas, 12.2,
and San Francisco, ~ per cent. An
even closer survey reveals larger per-
centages of loss in individual cities in
each one of these districts and in not
a few a smaller total of bank clearings
than in 1925.
This represents the quiet conditions
in the areas of the country devoted to
manufacturing, to mining, to farming.
to numbering and to the production of
oil, as well as to building and road
making activities.
Money Goes Into Stocks.
The effect is to intensity the con-
dition of abundant money supplies in
all of the Federal reserve districts of
the United States and to urge those
having idle funds to employ them in
the market for securities. There
seems to be no other explanation for
tn steady advance in the prices of
stocks, including those of companies
whose business results so far this year
have been unsatisfactory and whose
future prospects are not nearly so
good as they We're when their secur-
tiles were selling many points lower.
1t remains with the crops to bali
ance some of the unfavorable effects
of overproduction and a reduced pur-
chasing power in parts of the South
and West. The outlook for cotton was
not so good this week as it was last
week AS the season closes the crop
shrinks in size instead of expanding
as it did last year. The trade has
settled down to the belief that corn
will realize q smaller total at harvest
than any crop i'll over 20 years.
Whether the price to be eventually
realized per pound of cotton or per
bushel of corn will compensate grow
ers and merchants for the loss in
quantity will only be determined
months after the harvest has been
gathered in. Certainly the railroads
would be better off with a fair crop
at fair price than with small crop
at a high price.
BOSTON STOCK MARKET.