Evening star., 1940-07-28
Business Continues
Climb, but Stocks
Stand Still
Market Seems to Have
Lost Its Power to
Forecast Trends
BY FRANK MacMILLEN,
Associated Press Business Writer.

KllterP
There are shrewd students of busi-
ness and the markets today who
maintain that probably never since
trading began under the button
wood tree in 1892 has the market
shown more sign of losing its power
to forecast the changing winds of
production and trade.
The paradox of whirring indus
trial wheels, busy stores throughout
the Nation, expanding profits.
against background of listless and
depressed markets is turning hairs
gray in Wall Street.
What is it?
A kind of paralyzed bewilderment
in the face of the world shaking
sweep of events abroad?
The lull before some storm that
the collective mind of the market
place dimly senses is ahead for the
United States?
These and more fantastic sugges-
tions have been made and given
"lue publicity.
Then there are simpler explana-
tions which are advanced from time
to time by brokers to their CUSTOM
ers and over the luncheon tables
of India House and the Bankers
Club.
1t is a national election year. any
Wall Street has always tended to
caution when the fate of an adj
ministration was before the counr
try.
Higher Taxes Feared.
1t is time when higher taxes
are surely in the offlng, because of
national defense expenditures. and
that makes trade and industrial
profits hard to predict and the val
ues of securities obscure for the
best-trained analysts.
And then that Wall Street favor
ite: Lack Of confidence" which
comprises all the above explana-
tions and dozens of others, accord
ing to whom you ask
But the facts are clear enough,
if the answers are not
Industrial activity is roughly at
the same level as at the peak of the
war excitement last fall 1t is bet
ter than it was at this time In 1887,
an active year 1t IS not too far be-
low the fabulous wear 1929, and in
tensive arms building could quite
conceivablv shove it above that level
in the next year or two,
Furthermore. some business eX-
pertS are pointing out, industrial
activity may be better than the
usual indices show. Much Of the
arms construction is in new lines.
Tons of recently developed alloy
metals. plastics. artificial flbers,
chemicals. complicated electrical in
struments and Photographic ma
terials must be built into the mech
anized war machine. Thus activity
is spreading. will spread much later,
into industries other than the Old
line steel plants. auto factories, rail-
roads.
Against this set these facts:
One dav last week sales in the
New York Stock Exchange dropped
to $4,000 shares. the slowest for
any fve-hour trading day since the
World War peace lull which came
in the summer of 1918.
More Issues Listed Now.
One competent authority esti-
mates that. considering the fact, the
number of issues traded in the ex-
change now is about double that of
1918. and that share price levels are
lower. the dollar volume of trading
now is about 25 per cent of the worst
1918 figures.
For no trading day so far In july
has turnover in the stock exchange
exceeded 450000 shares. and most
sessions have been much quieter.
Even with present reduced staffs. it
is estimated that brokers need up
ward of 100000 shares a day on
the average to break even. Only
90 days this year have exceeded that
mark.
On the score of price behavior. the
stock market picture is even more
bewildering.
Measured by the Associated Press
average of 60 stocks. the market
level now is about Sal a share, up
about 81 from the spring low but
nearly s11 below the best level of
January The average now is about
the same as the poorest of 1887,
roughly comparable year, but more
than S3l under the best price Of that
year. Yet most analysts agree pros
poets now are brighter than they
were in 1887. But it's war business
now. not peace business.
There. most analysts feel. lies one.
of the principal clues to the puz-
zle. War business is not only eco
nomically "unproductive. it is high
ly uncertain. The blitzkreig tech
nique may have made wars not only
much more destructive but much
shorter.
Yet many Wall Street observers
feel that even quick peace would
not effect our rush to arm. with its
consequent stimulus to production.
Again the statistics of last week
might have been expected to fur
nish fuel for the market, but sig
nally failed to.
Stocks on the average closed vir-
tually unchanged. and in fact are
almost exactly where they stood a
month ago.
Fast Pace Maintained.
Yet industrial activity, as meas
ured by the Associated Press index
held at the high for the year es-
tabished the previous week. 1t is
now at 1867 per cent of the 1929-30
average.
Steel mill activity increased more
than normal for this time of year,
power production likewise. Resi-
dental building continued to boom.
Automobile production. however,
began to show the effects of the,
approaching model change over.