Richard Whitney, NYSE Pres., defends value of speculation as providing liquidity to market, allowing investors holding securities to turn them into cash at any time; this is an essential service for complex civilizations. Short selling necessary part of market, absence would distort prices from “real estimate of security values.” Extent of short selling and “bear raiding” exaggerated. Also believes capital gains tax an indirect cause of last year's inflation in security prices.
L. Baldwin, Missouri Pacific Pres.: Backbone of the long drought has been broken; situation greatly improved over a few weeks ago; Midwest and South preparing speedy comeback from economic depression resulting from the drought; praises farmers' resourcefulness and determination.
Denmark Defense Min. proposes reduction of defense budget from $15M to $5M, abolishing ranks of General and Colonel and replacing with Inspector.
Mayor Walker's advisors now preparing to negotiate with BMT and IRT on city buyout; main question is price city can afford to pay while retaining 5 cent fare.
2,500 Bronx chicken pluckers schedule general strike for today; demand minimum wage of $25/week.
Airline demands construction of passenger waiting room at Newark Airport, say will move to another airfield if demand not granted.
Of 22M pounds of gelatin produced last year, 10M were used for dessert or salad and 5M for ice cream; also used to make movie film and unbreakable glass.
“Mechanical ears” being installed on safes; detect noise such as drilling, triggering alarm.
Market wrap: Stocks opened under heavy liquidation, with all sections hitting new low levels and very high volume.Selling continued until well after noon, interrupted only by a few brief rallies. A “stiff technical recovery” began in the afternoon; prices turned, and a good rally continued to end of the day, with leaders and all averages closing up for the day. Utilities, investment trusts, and trading favorites were particularly weak during early selling pressure. Bond market sold off heavily most of session on high volume, even soundest corp. bonds weak; sharp rally in last 15 minutes; US govts. were exception, dull and steady.
Foreign stock markets generally lower after Thursday's US selloff. Yields on first-grade German stocks now at 10%.
Early liquidation said mainly due to “unreasoning fear” caused by failure of one of NYSE's oldest brokerages yesterday. With credit ample, “It was the conviction in the banking community that a constructive program could be depended upon in the event of any real distress.” Some market students did contend there was evidence of banking support in the market. Nevertheless, various rumors again circulated during the early decline.
Trading remained orderly, with most industrial leaders having bids under the market and few wide-open breaks.
Bears argue that some stocks continue to sell at higher price earnings ratios and yields far below those reached in previous depressions; optimists reply higher valuations are justified in seasoned, financially strong stocks with record of consistently good earnings, also point to lower money rates vs. previous depressions.
Early selling ignored some positive news, including decline in brokers' loans, increase in commercial credit, and strength in commodity markets.
A. Coleman, Asst. Postmaster General, says inquiries indicate higher volume of mailings planned in Oct. and Nov., says this is one of best business barometers.
J. Schenck, United Artists Pres., says “business depression definitely is ending,” announces increased production schedule.
In spite of afternoon rally, there were 4 new yearly highs and 411 new lows. Until the rally, market had declined almost continuously since Sept. 10.
Market value of all shares listed on the NYSE on Oct. 1 was $60.143B, down $7.577B from Sept. 2.
Economic news and individual company reports:
Bradstreet's and Dun's weekly trade reviews say business situation complex, irregular, and difficult to read; Dun's notes improvement in retail trade over much of the country, though industrial activity hasn't clearly improved.
US steel unfilled orders Sept. 30 were 3.424M tons vs. 3.580M on Aug. 31 and 4.022M on June 30. Current consensus is that situation will not improve until next year at the earliest, and fourth-quarter steelmaker earnings will be poor.
Most aviation related cos. continue to lose money, but traffic is growing sharply; air mail in first 7 months was 4.453M pounds, up 17.5%, while passenger traffic on many airlines is up over 100%; for example, Aviation Corp. of Delaware carried 41,657 passengers in first 7 months vs. 20,659 in all of 1929.
Companies reporting decent earnings: American Chicle (chewing gum), City Ice & Fuel.
Company reports since Sept. 1: 126 companies reported higher earnings vs. 1929 and 158 lower; 545 dividends unchanged, 37 increased, 79 cut.
Higher priced cigars in decline as consumption switches to 5-cent segment.
“'I want to sell some Westinghouse short. I've got a tip that it is going very much lower,' said [the customer]. 'I would advise you against it,' said the broker. 'Remember, Westinghouse at 124 a share is over 75 points from the high of this year and more than 168 points from the high of last year.' 'But I'm positive it's going down. I have a chart that shows it,' said the customer. The broker sold the stock for the customer at 124. It got as low as 109 3/4 Friday. 'You see, you brokers don't know everything,' said the customer. 'What's the use?' said the broker.”
+ The Boring Stuff: