WALL STREET: A Satiating Effect

Under two waves of heavy selling in one day last week, the New York stock market suffered its worst drop in 15 weeks. All of the last month’s gains were wiped out as the Dow-Jones industrials dropped nearly 5 points to 226.65. This week, after a slight recovery, the market slipped still lower.

As usual, Wall Street had no precise explanation for the break, other than such old standbys as “profit taking, the Korean situation, fear of more taxes, etc.” But the Wall Street Journal made a valiant try to find something new. The trouble was that business was too good. Reported the Journal: some traders said “the flood of good earnings and higher dividends had had a satiating effect and had certainly ‘spread’ the interest so widely through the list that there was not sufficient concentration of buying” behind any one stock. In short, there were so many good buys that investors simply could not make up their minds how to spend their money.