Stock prices today dropped to the lowest levels of the year. The entire market conformed with the war scare pattern, with bonds weak, wheat and sugar firm and the other commodities lower. Traders were nervous, with the trading volume the second largest in the present year. Prices touched their lowest point in mid-afternoon, after which the volume slackened and prices advanced slightly from the lows as the result of a rumour that good news would be forthcoming after the close. The nervousness hinged on the Italian-Albanian situation. Reports of heavy foreign selling here caused a canvass of the leading foreign houses, which divulged only routine operations on behalf of Europeans.
Courtesy of Swan, Culbertson & Fritz The wholesale ünloading of stocks mainly for domestic account. While the frst uneasiness was undoubtedly due to the German violation of the Munich agreement, it is questionable whether the market would ha caved in so completely had Spring conditions equalled expectations.
Fears concerning the trend in the second quarter must be weighed, appraising the importance of the drastic letdown in equity values. Apprehension has increased as business activity failed to record the normal seasonal improvement.
Fundamentally, the current lack of a dynamic business recovery as much as the war scare accounts for the fresh survey of the market outlook.
The motor industry reports a decline in production and well-informed authorities expect the beginning of curtailed operations. The contemplated reduction of production rather reflects determination to control inventories. Re! sales of the major motor companies have climbed steadily since Christmas and as yet the buying buyer has not shot its bolt.
The situation is different from 1937, andthe conservative production programmes of the major industries bid fair to prevent necessitous inventory liquidation and the present readjustment is rather a letdown than a radical depression.
Earning power is likely to be affected by restricted production but a total eclipse is improbable. Excess reserves total near four billions of dollars, and unless one believes in pandemonium, it is hard to see how cash can be preferable to equities in a business revival only ten months old.
Barron's weekly price index, adjusted for trend, is placed at 725.
Text read from the printed page and cleaned; old type leaves the occasional error.