Wall Streeters are accustomed to it.
As each new year begins, stock prices generally rally at least slightly, rebounding from the December sell-offs when investors dumped lackluster shares to establish losses for tax purposes. What happened last week, however, far surpassed the usual January flurry: with a powerful surge, the stock market leaped into the new year. On each day last week, prices successively chalked up solid to spectacular gains, adding a total of 52.42 points to the Dow Jones industrial average. That barometer broke through the psychologically important 900 mark to close the week at 911.13.
Though that is still far below the all-time high of 1051.70 in January 1973, brokers were delighted that the Dow has at last jumped above the 820-to-869 range in which it had been mired for five months. Said John J. Smith, partner in the brokerage house of Fahnestock & Co.: "The market has finally broken out on the upside, encouraging the bulls."
Broadly Based. The rally was especially impressive because it was very broadly based and accomplished in some of the heaviest trading ever. Turnover on the New York Stock Exchange one day reached 33 million shares, the third highest on record. For all last week volume totaled 141,948,050 shares, the second highest trading week in history.
A large number of trades in blocks of 10,000 shares or more indicated that institutional investors—mutual funds, pension funds, trusts—that had been on the sidelines had strongly re-entered the market. Furthermore, just about all categories of stocks profited from the upsurge. On one day, advancing issues outnumbered declining ones by seven-to-one. Among the big gainers: Du Pont (11% points), General Electric (4 points), Procter & Gamble (5% points) and U.S. Steel (5% points).
Taken aback by the suddenness of the market's revival, some analysts fear that the rally has driven prices above appealing levels, and that a downturn must come. Indeed, it would be astonishing if prices did not slip back soon, at least temporarily, after shooting up so far and so fast. The most prevalent view on Wall Street, however, is that stocks are entering a second stage of a major bull market that, in the opinion of followers of the Dow theory, began unmistakably a year ago. Though the second stage of a bull market usually is characterized by a somewhat more cautious advance than the first, some analysts are predicting that the Dow Jones average could again test 1000 before year's end. Says Harold Jane way, a senior vice president of White, Weld & Co.: "We are not in a runaway bull market with all the speculative trimmings, but we certainly are in a positive environment."