The Bull & the Boom

Wall Street's golden bull added still more muscle last week. Shrugging off a nip at margin accounts by the Federal Reserve (see below), the U.S. investor drove the market to still another historic high. Led by some of the nation's biggest corporations, stocks on the Dow-Jones industrial average rose to 637.04 at midweek. By the final gong at week's end, profit taking had clipped only 2.51 points from the mark to put the weekly gain at 13.17 points.

The professional traders had just about run out of things to say about the market. Wall Street's brokers and analysts have chewed the juice out of all the minor, technical reasons for the continuing rise. Now they are coming to recognize the great, overriding reason: business is fine and getting better. The U.S. is off on a brand new boom.

New Gains. The news pouring from Government and corporate statisticians told of gains all around. Industrial production for April rose two more points to another record high at 149 on the Federal Reserve index. Nondurables were up a point, and slow-moving durable goods were finally sprinting ahead with a four-point advance to 164 on the index and the highest level since early 1957. With the housing boom still clipping along in April at a record rate of 1,390,000 new homes a year, output of building materials was up sharply; so were appliances, TV sets, furniture.

In Detroit, spring was really spring for the first time since 1955. Sales in the first ten days of May were at a near record 19,768 new cars daily, so good that Ward's Automotive Reports predicted production of 500,000 units in May, another 500,000 in June, and possibly even another in July, traditionally the tailoff month in every model year. For steel, it meant one more increase, with schedules calling for 94.1% of rated capacity and record production of 2,665,000 tons this week.

The Future. What the U.S. could expect in the future and what might well send Wall Street's stock market higher still was contained in the predictions of industry's executives. Ford Vice President Charles R. Beacham predicted that auto sales in 1959 would top 1958 by 40%. U.S. Rubber General Sales Manager Herbert D. Smith predicted record sales of 94.5 million tires this year for the replacement market, to say nothing of the 29 million tires that go on new cars.

The story of the tires could be equaled in dozens of U.S. industries, from TV sets to home freezers to autos, lawn mowers and swimsuits. The U.S. economy is so big that its replacement needs alone--the purchase of goods to replace old or only slightly used possessions--are enough in 1959 to keep many a businessman as busy as he could be.

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