Detroit evening times. (Detroit, Mich) 1921-1958, 1942-05-11
To-Day Market
Rally Shows No
Signs Of Hating
Air Transport Stocks
Rise While Manufacturers
Shares Register a Decline
By LEWIS HaNEY


Professor sf Economics. y. Y. University
AS this Is written. the stock
market has rallied for 10 days
or so without signs of halting.
Some nearby reaction seems
rather likely. (Only the non
practicable event OF great VIC
tory for the Allied nations
would be likely to prevent thiso
Any reaction. however, seems
likely 10 be minor affair.
possibly not penetrating lows al
ready made. The ground Is being
prepared for a more stabilized
market and recovery to a level
more consistent with earnings
and the outlook for the value OF
equities in American business
enterprise.
The averages on Friday last
week had rallied 10 the approx
mate level of April ID when the
market broke through a critical
level
ct was then that Roosevelts
continued pro-labor attitude and
the extent of the wartime con-
trolls, were revealed. The failure
of Cripps in India, and the de-
velopment of the japanese threat
i'm Burma and the Indian Ocean,
became known
At about this level. logical
basis for resistance TO recovery
may be expected. Incidentally,
this aspect of the matter should
make any reaction here less dis
couraging.
An outstanding market fea-
ture Is the shift IN appraisal OF
the main factors affecting in
vestment values. This Is seen
In the marked divergence among
different stocks, and the change
in leadership on the rally. II is
especially notable that the con-
sideration OF possibilities OF
relatively early peace was gained
OF late.
This has been accompanied by
a related moderation in fears
concerning excess profits taxes.
AS a result, air transport stocks
rose while airplane manufactur-
erS' stocks declined.
While Chrysler hit new hie
Bath Iron Works hit new lo'
The steady Garner type
sock gained: while war babie
weakened. as being subject to
sitter excess profits taxes 10
losses in the postwar period.
on the bull side, one notes
that the market shows more
tendency 10 respond TO favorable
news. This is a corollary of the
fact that il has discounted
great deal of bad news. In this
connection, the duration and eS-
tent of the decline since Sep
temher. 1889. which has run to
nearly so points in the Dow
Jones 'industriak, is not to be
ignored.
Clearly "the bad news" on
taxes and war controls was
about "out" with Roosevelt's
radio talk, as shown by the
steady rise in stock prices there
after.
There is still relatively large
short interest which must cover
some day.
The extreme dizziness. and the
rise in the price of a stock ex-
change membership are symp-
toms OF near-bottom levels.
There has also been an excess
of rises over declines, and the
number OF new lows made each
day has been reduced.
But the main bull point Is
the reduced uncertainty as 10
the spirit and attitude OF the
people and Congress. There is
more tendency to recognize the
Importance Of idividual enter
prise and profits. While tax rates
are high, they will be adjusted
so as TO improve the tax posi-
ton of companies with steady
earnings. Consideration is given
TO paying back some excess
profit taxes after the war.
So while uncertainty a TO i'm
portant tax details and war con-
trolls over business remain, and
the rally in utilities and oils
has been checked by rationing
and other government policies.
I look for no more than a minor