Six-Month High

Said a puzzled broker last week: "People have been waiting for a reaction. When it doesn't come they get restless and buy anyway." He was talking about a phenomenon that baffled but delighted brokers last week. For three days more than 1,000,000 shares changed hands on the New York Stock Exchange. More, the market turned in the best Saturday (680,320 shares) since last September. Net result: a three-and-a-half-point rise in the Dow-Jones industrials average, to a six-month high.

Causes. Most widely cited "reasons" for the sudden upsurge (all pure Wall Street guesswork):

P: That the rise was an overdue result of such bullishly anti-Roosevelt incidents as the Barkley blowup (TIME, March 6), previously held up by selling to meet taxes. More recent events, like the Colorado elections (see p. 22), helped too.

P: That the rise was reinforced by the Baruch report and other Washington evidence that the U.S. Government intends to grease reconversion with plenty of cash as well as good intentions.

P: That cynical investors' fears that the war is almost over have been relaxed by tough going in Italy and the Second Front delay.

P: That many corporations, despite hell and high taxes, have demonstrated: 1) a stubborn ability to turn in sound, relatively high 1943 earnings; 2) a new confidence that the large reserves corporations have already salted away are enough to carry them through reconversion. Two bellwether blue chips--General Motors and Du Pont--have already reinforced this view by declaring higher first-quarter dividends this year than in 1943.

Character. But what really pleased Wall Streeters was the "character" of the market. For more than a year every boomlet has been touched off by heavy buying in $1 to $5 cat-&-dog stocks, fourth-grade foreign bonds, etc. (TIME, March 15, 1943 el seq.). This time the dogs were still in demand, but there was heavy blue-chip investing. Du Pont, up six and a half points to 148, hit a new 1944 high; General Motors, A.T.&T. and Johns-Manville ticked off new highs, and a lot more long-neglected topnotchers did almost as well.

The buying was mostly for cash. (Much, however, was for the traditional makers of an unhealthy market: the little men who buy in at the top and sell at bottom.)

Caution. This week the market was up again in the first day of trading. But there are still plenty of Calamity Janes on the Street. Brilliant, bespectacled Gerald M. Loeb, E. F. Hutton partner, reflecting the still-prevalent pessimism, said: "I am bullish for the near term and rather indifferent as to the long term."

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