Wall Street Optimistic as War Rages (9-1-40)


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MANY FACTORS AID BUSINESS

Optimism in Wall Street Grows as Resistance Of Britain Stiffens

By Max L. Brown, United Press Staff Correspondent

New York, Sept. 1 (UP) –

Stocks, bonds, commodities and business moved forward last week in a general movement which some quarters predict will carry through for the balance of the year.

The performance of the Stock Market was the most heartening in months. Although widespread predictions were made that Germany might intensify her offensive against Britain during the Labor Day weekend, the stock list moved forward rather strongly in the closing sessions of last week.

That action indicated that a growing number of traders are now convinced that Britain can hold out and that she possibly may step up her war orders to American manufacturers in an effort to take the offensive in 1941.

The question of Britain’s ability to withstand the Nazi war machine has been Wall Street’s number one uncertainty during recent weeks, when favorable domestic business news kept piling up without market influence.

Other Major Factors

There were several other major factors behind the stock list rise. Business moved forward rather sharply and the preparedness program got its first real start with the awarding of hundreds of millions of dollars of orders to airplane manufacturers. In addition, Congress passed the supplemental $5,000,000,000 defense appropriations bill and the excess profits tax bill started taking definite shape in a manner not too displeasing to business. The move in Congress to conscript uncooperative industrial plants considered essential to national defense had little disturbing influence. Most business quarters believed that the House would kill that amendment to the training bill.

A rise in steel operations to over the 91 percent level, a new 1940 high, and predictions that the rate soon will cross the all-time peak of 94.4 percent set last November keynoted the increasing tempo of activity in the heavy industries.

Retail Sales Up

The brightened outlook for the consumers goods lines found its reflection in an upward curve in retail sales. Dun & Bradstreet reported last week’s retail volume 7 to 13 percent ahead of a year ago, the best year-to-year gain since the Easter period.

Improvement in outside markets also aided stocks. Bonds moved ahead under the lead of second-grade railroad funds. The buying in the carriers was based on belief that they will prove better speculations than industrial issues under terms of the excess profits tax bill.

Grains, hides and wool top futures led commodities forward in their first general rise in some time. Buying of hides and wool based on huge army orders for shoes and woolen materials. Meanwhile, a boomlet occurred in cotton textiles – a rather accurate barometer of the consumer goods field.

Building, chemical, steel, motor, copper, aircraft and merchandising shares met strongest demand in the stock list. Rails were given a fillip late in the week. Utilities lagged and oils made little headway.

Volume Increases

Sales aggregated 1,959,270 shares for the week compared with 1,556,580 in the preceding week. There were 971 issues traded during the period, of which 721 rose, 122 declined and 128 were unchanged. The Dow Jones industrial average reached the highest level since mid-May at 129.42, up 3.94, while the rail group gained 1.04 to 27.90, utility, 0.45 to 22.45 and 65 stocks 1.34 to 43.83.

Market experts were impressed by the performance of the list and some chartists were predicting that the industrials average would reach the 130-135 zone by October. These predictions, however, were based upon Britain’s ability to withstand Germany until the winter storms make an invasion of the British Isles a virtual impossibility.