A Hope Market
It has been clear for some months now that the bird of Wall Street is the dove. So it was no real surprise last week when new hope for peace in Viet Nam gave the stock market an exuberant lift. A paroxysm of trading twice shattered daily volume records on the New York Stock Exchange and sent share prices up enough to erase a third of the past winter's losses. Then, at week's end, the market settled back and waited to react again to events.
As stock prices have meandered near the bottom of their winter trough, Wall Street has for weeks yearned for a reason to cheer. Without the war, most investors see a resumption of unstrained economic growth, with lower taxes and interest rates, less wage and price inflation, a smaller federal deficit and diminishing pressure from the balance of payments deficit.
Burst of Joy. The buying stampede began with Monday's 10 a.m. opening bell on the Big Board. Professionals and small investors alike grabbed at shares throughout the day. The exchange's new high-speed ticker ran 15 minutes late reporting floor transactions By closing, volume reached a record 17.73 million shares, toppling the old mark of 16.41 million shares set on Oct. 29, 1929, the Black Tuesday that triggered the Depression of the '30s. The Dow-Jones industrial average of 30 blue-chip industrial stocks jumped 20.58 points, its biggest one-day gain m 41 years. Traders agreed that it was an emotional outburst of joy.
Next day was quieter, as stock prices edged up a bit more (2.71 points on the Dow-Jones industrials) and volume held high (14.52 million shares). On Wednesday, with the news that North Viet Nam was at least willing to talk, the trading avalanche roared to a 19.29 million-share crescendo. The ticker fell an unprecedented 47 minutes behind the action on the Big Board floor. Perspiring brokers cheered again and again as volume figures flashed across the magnified tapes projected along trading-room walls. The bellwether industrial average soared more than 13 points before profit-taking sales pulled it back to a modest 5.15-point gain.
The trading tapered off Thursday and Friday, but even so, the week's volume reached an alltime peak of 78,475,620 shares, topping a record of 65,948J60 shares set last Jan. 12. Despite a 6.71-point dip on Friday, the Dow-Jones industrials climbed 25.14 points during the week to 865.81. Investors bought heavily in automobiles, office equipment, savings and loans, electronics and glamour issues. Panicky speculators rushing to buy shares they had sold short in anticipation of falling prices accounted for some of the week's rush. More important, said brokers, mutual funds moved into the market: at the end of February (the latest available official figures) the funds had $3.4 billion in cash, or 8.2% of their assets, as compared with a normal ratio of 5% or 6%. Some analysts believe that March saw a buildup to $10 billion cash.
At week's end, few brokers expected the stock market to sustain its momentum in the weeks just ahead. Said Newton D. Zinder, a top E. F. Hutton & Co. analyst: "The market now is vulnerable to bad news, just as it was vulnerable to good news before." Yet peace, if it comes, seems likely to push stock prices to new highs. That is what happened sooner or later after World Wars I and II and the Korean War.
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