STATE OF BUSINESS: Good Start

• Share

The stock market entered 1958 in an upbeat mood. After months of slow decline, a record 5,073,730 shares changed hands on the last trading day of 1957. Despite the flood of shares offered by traders to establish tax losses, the Dow-Jones Industrial Average rose 3.91 points. Thereafter, with the selling pressure off, the index bounded another 8.87 points in the first two trading days of 1958, ended at 444.56, well above the low of 419.79 set two months ago.

The upturn was in the face of discouraging news. Freight carloadings for the Christmas week were down to 410,022, the lowest for that week since 1932. New applications for unemployment compensation for the week ending Dec. 28 rose to 550,995, the highest in any week since unemployment insurance began in 1938. The Commerce Department disclosed that manufacturers' sales (seasonally adjusted) dropped 2% in November. And for the second month in a row. manufacturers continued to liquidate inventories, by an amount greater than in any other month since the 1954 recession.

The bad news had its compensations. The increase in unemployment compensation was big partly because 7,000,000 more workers now have the protection of jobless pay than in the 1954 recession. Likewise, inventory liquidation will allow a swifter increase in production later.

But there was positive good news, too, to encourage the market. Department-store sales were still running at a record pace. Higher military spending and more rapid contract-letting promised to spur defense industries, while relaxed credit requirements for FHA home buyers (see Housing) promised to give the housing industry, already on the upgrade, another boost.

Surveying all the plus factors, Commerce Secretary Sinclair Weeks said that the business outlook is "far better than nail-biting pessimists think. The shower isn't over, but the sun shows signs of breaking through the clouds."