Evening star., 1954-01-03
Goods Services and Employment Topped All Records in 1853
Stock Prices
Show6.6%D Dip
As Year Ends
By Rodor Wineet
Associated Press Financial Writer

ASSoclateo PreSS FINANCIAL Writer
NEW YORK, Jan. a. The
stock market in 1853 ran into its
first annual loss in five years.
At the end of the year. the
market on average was sc per
cent lower than at the start.
The last loss on the year was in
1948.
Nevertheless, prices staged a
recovery drive in the final
months Of the year.
Many in Wall Street like to
think that the stock market
moves up or down in anticipa-
ton Of future business condi-
tionS.
And there is good support for
the theory that the market al
ready has discounted talk Of a
1854 business recession.
Readjustment Under Way.
Certainly. there has been q
widespread rolling readjustment
in various classes of securities.
Right now some are riding the
crest Of a boom while others are
dragging in the slough.
The market as q whole, as
measured by the Associated
Press average of so stocks, hit
its peak of the year on Janu-
ary S. That was the highest
point in nearly % years.
That high level was reached
in a surge after the election Of
President Eisenhower.
BY the time the new year
opened, economic measures al
ready were being taken to clip
the wings Of inflation-notably
tighter money and Government
economy.
The market was sensitive to
these changes. That was trans
lated into a high degree Of Sc
lective trading. Just buying and
selling "the market" was not
enough. Selection of an indus
try or a group of stocks in an in
dustry or a single stock had to
be considered carefully.
Market Swayed.
There were times. however.
when the market was swayed by
mass moves to sell. The first
of these came in the spring.
when the Communists first pro-
posed that prisoners Of war be
exchanged in Korea.
The market averages a short
time before had approached the
high of the year and failed to
break through. This created a
bearish atmosphere in Wall
Street that was ripe for the jolt
of uncertainty created by the
war prisoners, exchange pro-
poSals.
A new low came early in June,
and prices were slowly being
nursed up in a hesitant recovery
movement when a new selling
blow struck.
1t came with the signing of
the ceaSe-f1re in Korea. Selling
was based on fear-fear of the
consequences of peace. What
did the Government intend to
do about defense spending
What businesses would be af-
fected? Was this the end of the
great boom that followed World
War II? Diverse answers only
added to the confusion.
Lowest In September.
The wave of selling carried the
market in mid-September to the
lowest level Of the year in the
steepest dive Of the year.
Technically, it was decided
stocks now were in a bear
market and had been since early
January. Looking back. that
was easy to see.
But just as confidence had
disappeared so quickly, it was
restored swiftly. Peace was good.
Business was good. Earnings
held high. Dividends were sus-
tanned.
The drive upward from the
low of the year was the best for
many months. Most of the
damage done in the break was
repaired.
The degree to which con-
f1dence in the market was re-
stored was shown by one in
cldent near the close of the
year. Russia suddenly accepted
Americas proposal aimed at
peaceful development of atomic
energy. The impact on the
(See STOCKS, Page C-3.)