On Toward 880

Only a few weeks ago, the bears were out and growling on Wall Street. The Dow-Jones industrial average faltered after a sustained rise that had sent it smashing through the magic 800 mark; in the sharpest daily decline since the assassination of President Kennedy, it dropped 6.77 points in one day. As the bears saw it, this was the start of the major shake-out they had been expecting all along: it was time to dig in for a slide to well below 800. But the market barely gave them a passing nod before it turned around and galloped up 18 points in only eight trading days. Last week it set a new record of 830.17 before settling back at week's end to 828.57--and there was hardly a bear on the Street.

No Kiting. The market has given the bulls many strong points to bellow about. April, with an average of 5.6 million shares traded every day, was the third most active month in Big Board history (behind June 1933 and October 1929). Daily trading volume is now poking above 6,000,000 so often that hardly anyone gasps any more, even though just two years ago the daily average was a paltry 3.8 million. What especially pleases the bulls is the high quality of the most popular stocks. Leading the upswing are such solid blue chips as General Motors, Jersey Standard, Singer, International Harvester, Pittsburgh Plate Glass, Motorola--a sure sign that the buying is still dominated by the professional investors and the wealthy, who usually do not bite at untried glamour stocks or frighten easily at a slight downturn.

The small investor is still slowly returning to the market, but, says Eastman Dillon Partner S. Logan Stirling, "he is no longer in the silly stage looking only for new issues." One of the signs of the instability of 1961's runaway bull market was the ridiculous kiting that amateurs gave any new stock that came out. Today each one gets a cold eye, and wild successes are few. One pending exception: Communications Satellite Corp., the first blue chip of space, which last week set the price of its stock (expected to be issued in June) at $20 per share. Brokers were immediately swamped with orders, and many turned down all but their own customers.

Values Untapped. There will certainly be temporary drops in the Dow-Jones average this year as the market pauses every once in a while to catch its breath. But with the U.S. economy looking stronger than ever and the stock market so free of speculative excesses, only a few cold-nosed bears still sniff a sharp price break in 1964. Most Wall Streeters rub their hands with glee when they behold the market still so full of untapped values, of stocks selling at only 14 or 15 times the company's earnings. The most common prediction on the Street: the Dow-Jones will hit 880 before year's end.

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