Out of Hibernation

Like a bear emerging from hibernation, the stock market last week shook off the lethargy of many weeks and moved vigorously ahead. Starting the week at 479.04 on the Dow-Jones industrial average, the market advanced in heavy trading (marked by the busiest day in a year) to end the week at 486.72, the biggest price advance in three months. To many economists, it was a cheering sign that the market at last was taking note of the favorable business news it has been bearishly ignoring.

The Department of Commerce reported that the rate of increase in business inventories, one of the businessman's biggest worries, had slowed considerably in February. Inventories were up only $200 million compared to an average monthly rise of $550 million in 1956. Spending on new construction hit a record high for the first quarter, and the Government calculated that business outlays for 1957 will reach $37.5 billion, or 6% above 1956. March retail sales were 4% above last year, and the first surge of Easter buying pushed last fortnight's nationwide sales up 9% over last year.

There were also some minus signs. The nation's homebuilding, hit by the big drop in building for veterans, declined again in March to the lowest rate in eight years. The decline was reflected in the appliance industry, where sales of home laundry equipment in the first quarter were down 18% from last year, and in lumber and other industries tied in with housing. Steelmakers also were still trimming production: in Buffalo, Republic Steel Corp. was operating only five of its nine steelmaking furnaces.

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