Hopes pinned on Carter after stocks collapse

Press, 23 October 1978, Page 7

Hopes pinned on Carter after stocks collapse

NZPA-Reuter New York After one of the worst weeks in Wall Street’s history, nervous investors are hoping President Carter’s important speech on the economy tomorrow will restore some confidence to the market.

The Dow-Jones Average of leading industrial shares, generally regarded as one of the main measures of Wall Street’s health, tumbled by nearly 60 points last week—the biggest points plunge in the market’s history, including 1929.

The worst previous fall by the average was in November, 1973, when it fell by nearly 52 points during the first week of the Arab oil embargo.

Behind last week’s record decline was growing concern over high interest rates — already at record levels in some cases — and whether they will have to

go even higher before the explosive growth in the country’s money supply can be checked. President Carter will go on television tomorrow to announce new guidelines for wages and prices. Many investors apparently decided last week to trade their shares for cash in advance of the President’s speech, and this may have contributed to the drop in the Dow-Jones figure. The index closed on Friday at 838.01 after losing 59.08 points in the week. As recently as last month, the average hit its high mark for the year of 907.74. President Carter is expected to set specific guidelines on wages and prices in his speech tomorrow, and he may call for sanctions to enforce them. Some Administration officials have suggested that the programme will set a seven per cent ceiling on

wage increases and a 5.75 per cent ceiling on prices. But Wall Street investors — and labour leaders as well — have expressed scepticism that the programme will work in curbing inflation.