"Historic Milestone"

"Demand is feeding on success," said Lucien O. Hooper of Wall Street's W. E. Hutton & Co. It seemed an understatement indeed in a week when the stock market again surged to new highs, but it was the best explanation Wall Street had to offer for what has become the most spectacular phenomenon of the 1958 business recovery. On all but one day last week, stocks climbed to new records, closed the week at 564.68 on the Dow-Jones industrial average, up 10.42 for the week to an alltime record.* The Dow-Jones industrial average, most volatile of the averages, and Standard & Poor's index of 500 stocks weeks ago exceeded their alltime highs; last week, at long last, they were followed by a slowpoke: the New York Times combined average of 25 industrial and 25 railroad stocks, which broke through its alltime high set in August 1956. Crowed the Times: "A historic milestone."

One big reason for the steady market rise is heightened demand for a short supply of stocks. Though the average daily volume of stocks has more than tripled in the last ten years to 4,000,000, the number of shares listed has increased only 2 1/2 times, to 4.9 billion. This year the situation has worsened; with industry operating below capacity in the recession, it had little need to go out after additional capital to expand. Result: the New York Stock Exchange added only 112 million new shares for the first nine months this year, compared to 271 million added in the same period last year and 544 million in 1956.

The scramble for shares shows up most clearly in lower-priced stocks, which are more attractive to the public than higher-priced blue chips. When Lehman Bros, brought out its One William Street Fund at a price of $12.50, it got more shareholders in a day than F. W. Woolworth Co. (now selling for about 50) has had at any one time in its history. Last week issues selling for less than $25 a share numbered nine of the week's 15 most active stocks. Rumors of stock splits, and resulting lower prices per share, also sent higher-priced stocks spiraling; last week Pfizer drug rose from 93 3/4 to a high of 102 1/2, and Lockheed Aircraft from 56 3/8 to a high of 62 on reports from the companies that they were considering splits. The low price of the mutual funds (about 90% are selling under $25) is a big reason for their appeal, although the funds, in turn, drive the market higher by buying large blocks of high-priced blue chips. The National Association of Investment Companies reported this week that sales of mutual funds rose to a record $171 million in October, up from $128 million only a year ago.

*A favorite guessing game on Wall Street these days is figuring how high the industrials would be if American Telephone & Telegraph had not been substituted in 1939 for International Business Machines. Since then, IBM has gone up from 191 to 5.588, counting splits and stock dividends, while A.T. & T. has gone only from 165 to 200%. Harold Clayton of Hemphill, Noyes calculates that the average would now be at 1830, and other experts figure it at 910. All used different short-cut computations. To get the correct figure, it would be necessary to recompute the Dow-Jones average for every market day since 1939 --a task to challenge Univac.

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