Evening star., 1949-06-12
Many Investors Turn
To Preferred Stocks
And Senior Bonds
BY chorIes T. Speore
hersh American Newspaper AiIieres

Nersh American Newspaper Alliance
NEW YORK, June 1l.-One oi
the developments in the stock
market a week ago was the de-
mand for preferred shares o1
strong corporations at rising
prices coincident with a falling
market for the common stock,
Of the concerns.
In the present week q similar
trend has been observed. Insti.
tutions and private investors were
bidding avidly for high-grade
public utility bonds while quota.
tions Of Junior issues of these
companies were again under pres.
sure of liquidation.
There Is evidence that the
sense Of fear" which Field Mar
shal Smuts says grips the whole
world today has made investors
extra cautious when they have
new money to invest. They are
placing 1t In fixed interest securi-
ties rather than In equities.
Institutions that, q few months
ago. would not consider the pur-
chase Of bonds under a 3 per cent
yield basis now are willing to pay
a price that returns u to u of
per cent less. Comment was
made In the New York financial
district on the failure of New
Jersey and Pennsylvania insti-
tutions. formerly large buyers OF
Public Service Electric and Gas
issues. to bid for a portion of
Tuesdays new offering Of $751;
100000 by this company.
Trade News Unfavorable.
NEW YORK, June 1.-THE
stock market wasted away this
week on a diet of unfavorable
business news and fear of the
future.
The weeks decline was the
fourth in a row. Since midday
the market value of all stocks
listed on the exchange has been
shopped down more than $4,000
100000. Last week alone the loss
totaled around an even billion.
At the close of trading Friday
the general level of prices was the
lowest since May. 1947-and a
mere trifle above q five-year low.
In midweek, after the market on
Monday had taken one of the
worst spills Of the year. an attempt
was made to halt the slide but the
effort was feeble at best. A couple
Of days Of comparative stability
resulted more from a letup In
selling pressure than a revival of
demand.
The market ended the week q
little closer to the historic resist
ance levels of 194e, 1947 and 194s.
A break-through would be re-
'garded by many Wall Streeters as
q clear sign Of q further decline
This theory inspired a high degree
of caution.
Traders had to contend with
such information as another cut
In steel production, another drop
In business loans (20th week In a
row. rising unemployment, declin-
Ing personal income, the one-week
coal mining stoppage scheduled for
next week and the consequent
layoffs by many railroads, price
reductions in such basic raw
materials as zinc and copper.
dividend reductions or omissions,
the threat Of a price war In the
tire Industry, price cut by
Bethlehem Steel to meet competi-
tion-the list was long.
Active Spots Ignored.
The fact that such key indus
tries as automobiles and construc-
tion were literally booming was
more or less ignored. Signs that
the worsted industry-one of the
first postwar industrial casual
ties-was getting back on its feet
had no appreciable effect on stock
trends. The fact that Secretary
OF the Treasury Snyder said that
the Nations financial and eco
; nomic situation is "basically
sound" was shrugged of in down
town Manhattan.
High corporation taxes plus
taxation of dividends, many claim,
are throttling the flow of money
into securities. The rate of return
on money invested In stocks, ac-
cording to this theory, is so small
that investors have been forced to
j look for other outlets for their
funds.
Others feel that apathy on the
part of the public is responsible
for declining prices. Public par
ticipation in the market is un-.
doubtedly low, probably as low as
1t has been in years. The securities
business is doing its best to over
come this indifference but thus far
with Indifferent success.