Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-27
RECOVERY IN STOCK
MARKET HINGES ON
REVIVAL OF TRADE
Recent Advances viii Not Be
Held Unless Company
Earnings Improve.
ADVANCES IN INDUSTRY
FORECAST THIS WINTER
First Part of 1881 Expected to
Witness peak" of Next
Upturn.

Special Dispatch to The Star.
NEW YORK. July 26.-The tninness
of the stock market at times this week
has betrayed the poor quality of the
demand under which the last part of a
40 per cent recovery from the low level
of June had been accomplished.
Earlier investment buying had estab-
lished a groundwork for professional
operations by removing an excess of
stocks and disturbing the state of mind
of the short interest. It is again evi-
cent, however, that securities cannot
for any length of time be forced up
against set of unfavorable trade con-
ditions and that, whenever prices run
too far ahead of the industrial trend,
there will be an automatic halt in the
movement.
Wall Street is trying to avoid the
mistake of last April and by an exercise
of caution be in a position to take full
of the Improvement in COM
parative earnings of industrial and
railroad corporations when. these APP
pear in the final quarter of the year.
Averages Reflect Caution.
The cautious trend is aptly illustrated
by Standard Statistics index Of 80
stocks. This index, which Is based on
the average prices for 1926 adjusted to
the base 100, closed last week at 171.3,
dropped 10 1863 on Monday, rebound
ed 10 1898 on Tuesday, advanced still
further to 172 on Wednesday, dropped
again on Thursday to 1898 and during
the last two sessions f1uctuated close to
this figure.
A certain amount of oxygen can be
pumped into business and induce
freer respiration. This was done last
December Its effects wore of during
the Winter. Artificial stimulus can
also be provided for the stock market.
Here, too, the influence of it cannot be
sustained without supplementary aid
in the form of satisfactory earnings. or
at least early assurance OF them: The
market will be healthier in finding its
own level of values on the basis OF In
come returns, which IL did during the
first three weeks of july.
Heat Slows Up Market.
Extreme heat throughout the coun-
try, at a time when industry reflects
the maximum Slackness of a vacation
and inventory season, operated as a
deterrent to market transactions this
n.
withdrawing professional support after
a brief trial of the sort of manipulation
that did so much harm last Spring and
drew the public into sections OF the
market, to their ultimate loss, in 1928
and in 1929.
II it were a normal year there would
be much anxiety over the deterioration
of crops from excessive high tempera-
lures. With the SURPRISES actual and
~ d ArfxN nfV0 oh
equalization that producers denied to
themselves by refusal to reduce acre
ages. In industry and commerce the
closing of mills and the postponement
of retail store purchases, because OF the
heat, are not serious, a; they establish
a reserve ratio in operations and in
buying power that will display itself IN
a more temperate season.
Business Vitality Demonstrated. !.
The corporation reports for the sec
ond quarter of the year, published this
week. are not so poor as they had been
pictured in advance, considering the
severity of the trade depression in all
of its collateral phases. Once more the
fundamental strength of American BUSH
ness is exhibited in the ability OF the
great majority of concerns to continue
payments of regular dividends in spite
of net revenues that on outstanding
share capital, are half those OF last
year. We have to infer from this rec
ord that causes deeper than the stock
market unheaval have been and are
now at work. and that business stabili-
cation will ultimately produce perma-
nent market recovery rather than that
stocks shall lead business out of the
present slough of despond.
Opinion as to the time when this
will take place is focusing on the last
quarter of 1880. The trade decline has
now run a years course. The begin
nings of revival from such period of
reaction have frequently occurred in
August. The next five months bring
the peak" in nearly every important
industry and in transportation. From
September on. comparisons of earnings
will be vastly more favorable than those
of the previous eight months. Conse-
quently, sentiment, as well as fact,
ought to produce brighter picture
during the remainder of the year.
Copyright. 1e30)