Surprise for the Bulls

Even in Wall Street, where everybody is accustomed to the big bull market, the bulls were surprised last week. The market not only recovered from its nine-point slide of two weeks ago. but kept on climbing. At week's end the Dow-Jones industrial average closed at 332.53, up almost five points in a week. This week the market was still climbing. In one day Du Pont, on the rumor of a stock split, jumped 15 1/2 points to 1433 1/2. Said Commerce Secretary Weeks: "I don't care what others think; I believe the stock market is still one of the best barometers of business this country has." Despite the rising barometer, the Administration was taking no chances. The Federal Reserve Board cut bank reserve requirements by more than $1.5 billion, thus expanding by about $9 billion money available for loans, since banks on the average are required to keep $1 on deposit with the Federal Reserve for each $6 of their own demand deposits. The Administration hopes that by making credit easier, it will not only give the economy a boost but make money available for the seasonal increase in business borrowings.

There were signs that more credit will be needed. Automotive News reported a sharp upsurge in auto buying. In the first ten days of June, 20% more new cars were sold than in the comparable period of May. Used-car sales in May were also up 2.3% over 1953. Most of the increase was credited to harder selling by dealers, helped by bonus contests put on by the manufacturers. Dealers were also trying out all sorts of gimmicks on their own.

For example, in The Bronx, Martin Frankel, a Dodge-Plymouth sales manager, was throwing in a mink stole, which he said was valued at $786, with each new-car purchase. The dealer got the idea when a wife refused to let her husband buy a new car because she wanted a fur coat instead.

Department-store sales were also up 4% over last year. Despite the heavier buying, the Securities & Exchange Commission announced that individual savings during 1954's first quarter reached $3.3 billion, the highest savings in a postwar first quarter, and up $900 million from 1953.

Unemployment -compensation claims dropped to the lowest full-week levels this year, and the Commerce Department reported "modest improvement" in manufacturing since the first of the year. In May, for the first time in three months, the Bureau of Labor Statistics consumer price index went up, thus averting a 1-c--per-hour pay cut for a million railroad workers.

sb sb sb Even Europeans, who have been far more pessimistic than Americans about the U.S., were finally taking a cheery view. Said Chancellor of the Exchequer R. A. Butler: Although U.S. production fell more than 10%, "we and our commonwealth have . . . materially increased our own reserves and economic prosperity." Fears of an American recession have proved false and "we have managed to survive what we were frightened of--the possibility of a recession in the U.S.A."

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