The Market

The financial markets reflected the current situation in general business several months ago; the "discounting" performed by the stock market last fall is now quite clear to every one. The problem now before the securities markets consists of similarly forecasting what the situation will be next autumn. The present rate of industrial production has accelerated so swiftly that doubts are now beginning to be entertained in Wall Street as to the ability of this movement to endure. As a result, prices of shares on the Stock Exchange have proved irregular at high levels, with speculative reactions and rallies of only day to day significance. Meanwhile, gilt-edged bonds have proved sluggish, and have shown an unmistakable tendency to decline under the prospect, already realized in some measure, of higher money rates. Weaker bonds, however, have risen rather than declined in many instances, owing to their improved position following better corporate net earnings. French government dollar issues have proved strong.

The best speculative opinion holds that stocks will rise further and bonds will decline further, this year, although coming weeks may see a temporary reaction in the industrial shares whose recent rise has been most pronounced.