What Wall Street Saw

How deeply has the recession chewed into U.S. corporate profits? The Federal Reserve Board last week reported that in the first quarter of 1958, after-tax profits of manufacturing corporations tumbled 40.7% compared to first quarter 1957. Nondurable producers were off 32.1%, while durable-goods producers fell 46.1%, with primary metals and metal products (down 54%) and auto companies (down 52.2%) taking the worst licking. Yet once again Wall Street was busy looking ahead instead of backwards. With steady rises in most important groups, the stock market climbed another 5.17 points on the Dow-Jones industrial average to new high ground for the year at 474.77, just a little better than midway between the boom-time high and the recession low.

What Wall Street saw:

Chain store sales last month rose sharply, were 5.1% better than 1957. Total sales for 44 big chains so far this year: $6.7 billion, 3.7% higher than last year.

Private housing starts jumped 7,300 units in May, passing a rate of 1,000,000 for the first time since January.

Appliance sales by manufacturers turned up in May as dealers started rebuilding depleted stocks. Though the rise might be seasonal the National Electrical Manufacturers Assn. reported electric ranges up 7%, refrigerators up 33%, farm and home freezers up 19%.

Auto production increased another 11.2% last week to keep time with rising sales, though so far this year it is still 34.1% behind 1957.

Industrial production rose to 127 in May on the Federal Reserve Board index, up a point since April and the first rise in nine months.

As for prices--they looked to be on the way up, too. Both Westinghouse President Mark W. Cresap Jr. and General Electric President Robert Paxton saw little chance of a price cut in appliances, instead talked of price increases forced on the industry by higher labor and material costs. In steel, which picked up speed to a scheduled operating rate of 63.8%, a little price cutting cropped up in the Detroit area, where Great Lakes Steel Corp. chopped prices $2 a ton. But it was strictly a cut to meet local competition and not likely to spread. The industry soon expects to hike prices to cover the automatic wage increase going into effect on July 1. Consensus: probably $5-$6 per ton.

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