Evening star., 1949-02-06
Stock Values Reduced
Nearly Two Billion
In Last Two Days
BY the Associated Press

| BY the Associated Press
NEW YORK, Feb. Stock prices
cracked to the lowest average level
of the year in a fast two-hour ses-
sion today.
1t was the second drop in a row.
In two days nearly $4,000, ,O0O, 900
have been cut off the market value
of all shares listed on the exchange.
Saturdays dive was the steepest
since November g. On that day the
market was swamped with post
election selling orders.
Seventy-one stocks plunged to new
lows for 1948-9. and individual
losses ranged from fractions to more
than 3 points. Hardest hit were the
stocks of such basic industries as
steel, oil, rubber, and railroads.
Wall Street blamed def1ation and
falling commodities. Notable, though,
was the fact that the general public
stuck to the hands-off policy which
has been maintained for months.
Professional elements in the finan-
cial district accounted for most Of
the activity
Market Volume Expands.
Sales amounted to 100000 shares,
largest for any Saturday since
November 6. Only IT of the 95l
issues which changed hands closed
higher, while 7l5 declined
rl,o Dracc oF en-
stocks lost IL points at 63.4, the wid-
est drop since 2 full points were
cilpped from the average on Novem-
Der 9. The average is now at the
years low first established on JAM
uary 3, which in turn was low
since November 30.
New lows for the past year or more
were rung up by, among others, New
York Central at 115s, Southern
Pacific, 1875; Northern Pacific, IS;
Atlantic Coast Line, 407s; Illinois
Central, Is; Standard OIL Of New
Jersey, 665s; Texas Co., 49as; Pacific
Western OIL 35, and Graham-Paige,
2as.
Scores of other issues slid to
within flirting distance Of their
1948-9 bottoms.
Some of the larger losers included
U. S. Steel National Steel. General
Motors, Chrysler, Goodrich, U. S.
Rubber, Montgomery Ward, Oliver
Corp, Consolidated Natural Gas,
Kennecott Copper, American Smelt-
ing, Du Pont, Dow Chemical, Amer
lean Tobacco and Skeny Oil.
Drop Started Friday.
The trouble started on Friday.
Creole Petroleum, almost wholly
owned by Standard Oil of New Jer-
Isey, announced that its dividend had
been reduced. The company cited
reduced demand for crude oil, large
inventories of oil products and
weakening price structure. Selling
hit the oils, soon spread TO other
groups.
The Creole announcement evi-
IDENTIFY brought to focus dozens OF
recent news items which the busi-
ness world has rated unfavorably
and which, for good or bad, add up
to defation. A more than seasonal
increase in unemployment, lower
prices for many foodstuffs at the
wholesale level, record high inven-
tories. lower scrap steel prices, lower
freight carloadings, further con.
traction in money in circulation
the list is impressive and could be
broadened.
The short-term outlook-and OBJ
servers in the financial district em-
phasized short -term-was unsettllng
to market men. Traders ignored for
the time being the fact that sooner
or later the postwar inf1ationary
cycle had to reach and pass crest,
that a shaking-down period was in
evitable and that stability at level
little below the record highs was
considered highly desirable.
Forced to Raise Cash.
In addition to the atmosphere of
deflation as a selling factor, brokers
reported a specific reason:
The drop in commodities has hit
hard at spectators who have been
trading in such futures as wheat,
corn and cotton. Calls for addi.
tionel margin money have gone out
of brokerage Offices almost every
night. A large part of the money
called for has been raised by selling
stocks. Steadier commodity prices,
it was suggested, would relieve the
stock market of a good deal of this
kind of pressure.
Stocks that are sold, of course,
have to be bought. What one broker
termed highly stabilizing influence
on the market we're the operations
of the group funds and investment
trusts. who were reported as max
ing substantial purchases as prices
declined. Many of these funds are
basing their strategy on the theory
that business is good now and will
remain good throughout 194s-and
the portfolio managers of many Of
the funds are among, the shrewdest
operators in Wall Street,