Evening star., 1937-07-04
DELAY IN MARKET.
RALLY IS BLAMED
ON LABOR TROUBLE
Recent Reaction Termed
intermediate Reversal
Of Upward Trend.
CONTINUATION OF DROP
REGARDED AS UNLIKELY
Sharp Break in First Half Year
Laid to Commodity Slump, Gold
Scare and Other Factors.
BY GEORGE T. HUGHES.
,cIal Dsnatch To The Star

Special Dispatch to The Star.
NEW YORK, July BIN one re-
spect the course OF the stock market
in the first six months of 1887 was
similar to that in the first six months
Of 1886
In both half years there was, first,
q continuation OF the advance, with
new peak prices attained for the bull
market, and, second, a reaction which
Cancelled either all or a good part of
the gains. In 1887. however, the break
was much sharper. more prolonged
and more disturbing than that of the
Spring of the year before.
In 1887. taking the list as a whole,
the low prices were made in June.
whereas, in that month Of 1886, the
recovery WAS already underway.
More specifically. the bull market
made its high this year in the first
and second weeks of March. from
which peak it retreated in series of
reactions. each one touching a lower
level than the one Immediately preced-
ing and each rally falling short Of
the one that came before it, In other
words. the pattern was that OF typi-
cal bear movement.
Regarded as Temporary.
Up to the end Of the half year there
was no reason to suppose that the
major advance, the one that began
way back in the Midsummer of 1882
had terminated and that another
great deflation was impending The
chartists interpreted their curves as
meaning simply an intermediate re-
versal of the trend. In the nature OF
the case. only the event can determine
whether they are right.
A continuation OF his progressive
breaking through of old resistance
points would be significant Of a pro-
longed downward trend, but that does
not seem likely at this writing.
One group staged a bear market of
its own all through the half-year
The utilities had only one period Of
worthwhile recovery and that was
in the first two weeks Of the year
From then onward they gave way
steadily. until, in June, they were
lower than at any time since Octo-
Der, 1885
This steady decline in itself made
for pessimism about the rest of the
market, although it was explainable
on grounds peculiar to the utilities.
Leaving the utilities out of con-
the course Of the market
was determined by the other two
groups, with the greatest interest in
the industrials. as is usual nowadays
The sharp advance to peak prices
for the major recovery witnessed dur
ing the Winter and early Spring was
based on glowing reports Of business
Especially was this the
case in the heavy industries.
Steel Backlogs Heavy.
The steel mills were said to be
booked up for months in advance
with buyers almost panicky because
they feared they could not obtain the
materials they needed World wide
rearmament gave impetus to this &C
tivity in iron and steel and heightened
the speculative fever.
The break came abroad before 1t
did here. The spectators over there
overdid the matter, as they always do,
and, when they decided to liquidate,
which they did all at once, the whole
world Of markets, from johannesburg
to Bombay. vas shaken New York
did not escape, as the fact that the
shake-out of April 7 was the most
severe in three years testifies to.
The subsequent dullness on this side
was also proof, If any were needed
Of the extent of the dependence of
the local market on London's inter-
est therein.
The six months were remarkable
for the number of warnings official
and semi-official, issued by or on be-
half of governments and by economists
and business men. Practically all of
them emphasized the danger of
boom, either in business itself or in
the commodity markets. Securities
were left to take care of themselves,
but as matter Of fact they were in
f1uenced by commodities and so af-
fected indirectly by these outgivings.
Connected with the break in COM
if not indeed partly at least
the cause of it, was the worldwide
See HUGHES, Page D-8)