Down, Down, Down

Summer was almost over, and there was a chill on Wall Street. At the New York Stock Exchange, Dow-Jones industrials started last week at 804.62, and fell 12.59 points for a tenth consecutive Monday loss. Tuesday, the industrials slipped another 1.89 points on the largest single-day volume (9,830,000 shares) in three months. On Wednesday came a 9.41-point rally--only to be followed by two days of loss that wiped out the gain. Ending the week at 780.56, the industrials thus showed a five-day loss of 24.06 points (and a two-week drop of 59.97) and stood as low as they have since January 1964. In all, since February Big Board prices have dropped 22% and $104 billion in stock values have disappeared.

Not '29 nor '62. Inevitably, the continuing downturn caused some to recall that awful autumn of 1929. There was, in fact, no comparison. The industrial average in '29 stood half as high as it does now--the year's peak was 381.17 --and the market took terrifying tumbles with only about half the volume of trading. On '29's infamous Tuesday, Oct. 29, the day the market crashed, the average plunged by 30.57 points. In that October alone, the industrials lost about as much (20%) as they have all this year. From 1929's high to its low they lost 48% .

Nor is the current market as bad as the last great break in 1962. That time, the slide was signaled in April after the famous confrontation between President John F. Kennedy and U.S. Steel's Roger Blough. The steel-price rollback resulted in a two-day loss of 9.79 on the industrials, but in the next week the average gained back two-thirds of that loss. In May, after a steady downturn, investors panicked. The industrial average declined 38.82 in five trading days, and on the following Monday sellers colored it blue. The industrials lost 34.95 points in one day.

International Tone. By any other standard, the '66 market is bad enough. Since February, the industrial average has declined on 80 trading days v. gains on only 53; during the first 20 Big Board trading days in August, 15 ended up with the index off. Where the blue-chip stocks had been taking the brunt of the beating since February, last week glamour stocks inevitably began to follow them down. Xerox lost 15 5/8 in a day, Fairchild Camera fell 14 3/8, and Motorola on the final day of trading plunged 23 3/4 points, from 182 to 158 3/4. In all during the week, 973 stocks hit new lows for the year, the largest number to do so since that calamitous week in 1962.

It was hardly a comforting fact that Wall Street was not alone in its troubles.

It may no longer be true that when the Street sneezes, foreign bourses catch pneumonia. But foreign traders still suffer at least psychological symptoms from any U.S. decline. London's exchange last week hit a three-year low of 294 on the Financial Times industrial index, and British brokers admitted that they needed New York to "set the tone for recovery." The Swiss exchange, after peaking as New York did in February, is off 18%. Amsterdam's market has lost 25% of its values this summer, and West Germany's markets are off 20% since February. Paris' bourse, in the doldrums longer than Wall Street, is sagging in spite of large stock purchases by French banks on orders from De Gaulle's government.

When will Wall Street set a better tone? Monte Gordon, vice president in charge of research for Bache & Co., looks toward the time when speculative fever will subside. "The market will stop going down," he says, "when people stop trying to make huge profits in short periods of time." Lewis Schellbach, executive vice president of Standard & Poor's, thinks that some investors are worried enough to dump their stocks. "This decline has gone so far that we really need a selling climax," he says. Said James Hart, a Lehman Bros, partner: "For the near future, the trend is down. But how far, and for how much longer, is in the realm of conjecture." Among stock watchers he would find very little disagreement about that.

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