Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-17
SECURITIES CLIMB
IN WEEKS TRADING
Motors and Steel Form Back
ground for the Recent
Bull Movement.
BY GEORGE T. HUGHES.


NEW YORK, July 16.-The out
standing development of the past
week IN the financial situation has
been the continued appreciation in
security prices on the stock exchange.
1t can be said almost without reserva-
ton that this has come about as the
result Of conditions within the market
itself, rather than any fundamental
change In outside business.
The steel trade has entered the
period Of seasonal recession in opera
tons at the steel centers. SO that the
market for the steel stocks finds little
incentive in reports from the mills
upon which to base constructive opera
tons. Nevertheless United States
Steel just before the close of the week
sold at the highest since the 40 per
cent stock dividend was deducted from
the price.
SO far estimates of what second.
quarter reports Of the steel companies
will disclose have been problematical.
But speculative Wall Street has been
inclined to anticipate more favorable
showings than were indicated at the
beginning of the period. 1t will be
interesting to note, as these reports
come to hand next week, whether the
renewed campaign for higher prices
for steel shares has been justified.
Motors and Steel Leading.
General Motors and United States
Steel provided the background for con-
tinued upbidding Of other seasoned in
dustrials. The keen competition which
eventually must make itself felt in
the motor industry has been lost
sight Of in the recent calculations.
The optimistic remarks Of President
Erskine Of the Studebaker Corpora
ton concerning results of the first six
months, and what can be expected
for the remainder OF the year, found
a ready response in the market for
Studebaker which had been under
pronounced pressure recently.
Talk also has been heard of the
formation Of a holding company with
view to acquiring a number OF the
smaller companies, which might ulti-
mately mean consolidation into one
huge combine. This has been reflect
ed in an active demand for Jordan
Motor, Gardner and several others in
this category, although it Is a Ques.
ton whether this was the main in
centive for the recent buying.
That the market Is under control
Of powerful interests has been evident
by the action of stocks like Baldwin
Locomotive and others where the
floating supply Is small. Operations
for the rise in almost every instance
have encountered little or no opposi.
ton. Baldwin sold this week at its
highest price in history, and there is
nothing to indicate that the short in
terest has succeeded in obtaining its
requirements Of the stock.
Brokers' Loans Drop.
Wall Street received a rather unex-
pected surprise last week when it
was disclosed that brokers' loans for
the month Of June had increased over
S11 100000. But the decrease of over
SGT 900 900 in the week ended July 10
restored speculative confidence and
encouraged the belief that the tech
nical structure of the market was not
seriously impaired. Another instance
of the continued piling up Of credit
resources was the fact that during the
latter period the ratio of reserves for
the Federal Reserve system as a
whole had increased from 1858 the
previous week to IS per cent and COM
pared with 74.9 per cent a year ago.
One of the outstanding features
bearing upon the railway situation
was the announcement that the New
York, New Haven & Hartford was
considering the issuance of Z per
cent cumulative preferred stock to be
convertible at par into common. This
was an instance OF the recovery
which has occurred in the affairs of
the road during the past few years,
and the fact that 1t was now in a po-
sition to do new financing in the form
re CT thar no @o ct
nificant. How the money obtained
through the contemplated new issue
Is to be used was not made known,
but 1t was intimated that plans were
under consideration for refunding a
portion of the Indebtedness to the
Government.
Reinvestment in Rails.
The high-grade dividend.paying rails
continued to feel the effect Of the re-
investment Of midyear interest and
dividend payments, although inter.
ests in close touch with the market
for railroad stocks were expressing
the opinion that the buying of this
character has not as yet made it's APP
pearance to degree that might have
been expected.
Although new bond offerings totaled
$67,219,000, compared with $43,543,-
600 last week, there has been a no.
ticeable lull in the market for new Sc
curities. Notwithstanding the slight
increase, the total for the last three
weeks has been less than 100000, 900.
Nevertheless, the stock market fails
to be influenced by this condition and
there are indications that the unsold
portion of recent syndicate offerings
are difficult to dispose Of despite the
concessions in prices from the orig
ina1 subscription figures. The bond
market has displayed a somewhat
flrmer tone, but has been over.