STATE OF BUSINESS: New High

The stock market, along with the Democrats, swept to new highs last week. The Dow-Jones industrial average rose to a record 554.85, owing partly to some investors' fears of bigger spending and more inflation under the Democratic Congress. But many an investor had other good reasons for buying stocks, such as rising corporate earnings and continued recovery of the U.S. economy.

The market got another push from the short supply of stocks; mutual funds and other long-term investors have bought so much stock that comparatively small orders push prices up. When waves of profit-taking brought a dip, new buyers soon started prices up again, though at week's end the market had eased from the record high.

Commodity prices also rose during the week (the Dow-Jones spot index was up 2.40 points to 160.08, futures up 2.03 to 154.55) on the belief that Congress will boost support prices, causing an increase in overall agricultural prices. But, said Merrill Lynch, Pierce, Fenner & Smith's Commodity Expert Harry B. Anderson: "Last week's rise in commodity indices is only flash-in-the-pan buying. With most grains and raw materials in oversupply, inflationary pressures are not very realistic and will be difficult to sustain."

For consumers the Agriculture Department predicts most foods will be more abundant and cheaper in 1959 than this year. Big harvests this fall and higher supplies of poultry and eggs are already dropping some prices, the department reported. Said Ewan Clague, commissioner of the Bureau of Labor Statistics: "The consumer price index is likely to hold around current levels for the next few months. Inflation may turn out to be a problem in the longer run, but it is not an immediate prospect."