State of Business: The Uncertain Prophet

"This market has got me bewildered," said University of Chicago Economist Milton Friedman last week. Friedman was in good company. Everywhere in the U.S., economists, brokers and ordinary investors were unhappily asking themselves why the stock market was persistently declining in the face of solid—if not spectacular— growth in the general economy.

Since December, when the Dow-Jones industrial index hit an alltime high of 734.91, it has dropped with a speed that has left many a stomach queasy. Fortnight ago, the index fell even farther than it had in the week following...

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