STATE OF BUSINESS: Rebound

With a bullish snort, the stock market last week regained about one-quarter of the 52 points lost since August. The Dow-Jones industrial average closed at 482.39, 15 points above the low at the start of the week. The upswing was almost identical to the surge from a 53-point drop last May. Said Wall Street Broker Harold L. Bache: “I look for higher prices and increasing activity in the market.”

Last week’s snapback was triggered by predictions that 1957 would see production and sale of 6,500,000 to 7,000,000 autos, and that the Suez trouble would be solved without war in the Middle East. Even more important, Wall Street was getting over its scare that Eisenhower might be licked.

Some business leaders still viewed that prospect with the kind of alarm that caused the market to dip after the Republicans lost the Maine state elections. “Venture capital,” said one, “would crawl into its shell and creep away.” Others shrugged their shoulders. “You might do better with Ike,” said Connecticut’s Richard G. Williams, major stockholder of the J. B. Williams Co., “but you won’t go broke with Stevenson.”

The majority business view was probably expressed by Inland Steel Co.’s President Joseph L. Block, who forecast that whatever happens Nov. 6, steel output should approach a 12O-million-ton record next year, rise to a 143-million-ton capacity by 1959. “But it should enhance business confidence,” said Block, “if the President is re-elected.”

American consumers are convinced of the soundness of the economy as well as of their personal financial situation, reported the University of Michigan Research Center, which periodically checks consumer attitudes. “Their optimism about business trends and their own welfare has not grown since the fall of 1955 but is as great as at any time in recent years. Relatively few people can now think of any economic developments which might affect business conditions adversely in the months to come. And only a very small minority fear that their financial situation may deteriorate in the next year.”

Business is still expanding at a record rate, reported Manhattan’s First National City Bank. The expansion pressure is so great that it is outracing the supply of materials and the physical limitations of construction industries. Concluded the bank’s monthly letter: “The growing demand for consumer and investment goods has been calling forth increased production, employment, and income with rising momentum which promises to carry over into the early months of 1957.”