Evening star., 1951-07-15
Stock Market Shows
Nearly Full Recovery
From Truce Jitters
By Roder Wineet
Assoeioied Press FinancioI Writer

Associated Press Finaneiol Writer
NEW YORK, July IA. - The
stock market this week showed al
most complete recovery from the
first shock Of the Korean truce
proposals which three weeks ago
sent prices spinning to new low
for the year.
This week prices advanced on
four out of five days, and yester-
day most of them stood at a higher
level than they did three weeks
ago on the eve of the Russian pro-
posal that fighting cease in Korea.
It was the second week in q row
that the market recovered, and
the persistent advance strength
Iened the belief that perhaps at last
the traditional summer rally was
underway.
Bullishness Restrained,
There were two big weaknesses
in the general advance that served
to restrain bullish enthusiasm.
The first was the comparatively
low volume of business transacted
Iat rising prices. The second was
the fact that the railroad section
Iof the list Jagged well behind in
the recovery and have not yet
made up losses they took during
the selling waves that followed
initial truce negotiations.
The Associated Press average of
so stocks gained $1.30 this week
and yesterday stood at $92, 20.
On Friday. June %, the average
was $91.40. It was the following
Sunday that Russia's United Ma
tions' delegate proposed a Korean
cease fire and sent the stock
market into nose dive.
Volume Dips to $4,000 Shares.
Last week when the recovery
movement got underway, the vol
ume OF business averaged around
l $4,000 shares daily. But this
week that daily average fell to
around 1,088,000 shares daily. On
Wednesday the volume fell to 970,-
900 shares. lowest IL. more than
q months.
The yardstick for volume mea-
surement is the daily average this
year-around 1865, 900 shares.
Just about everything else, how
ever, was favorable to the advance.
Here are some of those favorable
factors.
Reports on sales and earnings
for the first half of this year now
are coming in, and so far they
are favorable. In fact the s.econd
quarter may turn out to be better
than most businessmen earlier in
the year thought it would be
Some Of these reports inspired
buying, and that improved senti-
ment generally.
Growth Stocks Widely Bought.
Even before the market hit bot
tom two weeks ago, there were
signs OF investment buying. That
provided good cushion on every
dip, and on some quiet days large
scale investment buying put a.
prop under the market.
At the same time there was wide
buying of the growth stocks. Those
are the industries with long-term
potential expansion possibilities,
and usually industries that can
operate profltably either in war
or peace.
In Washington, developments
were regarded in Wall Street as
highly favorable. Congress whit
tied away at the administrators
control powers. and more voices
were being raised against taxes
and in favor of greater economy in
Government.
But there was no talk about
slowing the big defense build-up.
In fact at the end of the week the
stock market got a fiillip out of
the proposal by Senator Lodge,
Republican, of Massachusetts,, for
spending $74 billion in three years
on a 150-group Air Force.
Help Promised to Auto Makers.
The Government also promised
union leaders that something
would be done about the slacken-
ing of the automobile industry
which is having its civilian pro-
duction choked off but isn't get
ting enough in war orders to COM
pensate.
And this week the good health
OF national economy was shown
by two reports-steel production
in the first six months this year
was the highest on record. and the
Federal Reserve index of indus
trial production in June held at
the highest level since 1945.
And finally. Wall Street analysts
considered. one of the most bullish1
factors of the week was the man
ner in which the stock market
virtually ignored the break in
armistice talks in Kaesong when
armed Communists turned back
United Nations journalists. That
market reaction. or lack of reac-
ton, meant to many observers
that frightened selling brought on
by the unexpectedness of the
truce proposal had spent itself or
at least could no longer be con-
sidered a peril to advancing prices.