State of Business: How High the Moon

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How High the Mood

With a strong surge, the stock market last week reached an alltime peak. The Dow-Jones industrial average jumped to 694.11, passing the previous record of 685.47 on Jan. 5, 1960. The rise of the industrials signaled the increasing strength of the market. Though broader-based market indexes had reached alltime peaks weeks ago, the industrial index, heavily weighted by capital goods stocks, had lagged a step behind the exuberant pace set by consumer goods and electronics. Now industrials—the classic measure of the market's strength—were beginning to catch up.

Stock selling to meet tax payments usually checks the market at this time of year. But it failed to affect it last week. The volume of trading, which has been steadily rising (see chart), remained at near-record levels. On three days last week, more than 5,000,000 shares were bought and sold on the New York Stock Exchange. The trading was among the broadest in the exchange's 168-year history, with shares in 85% of the listed issues changing hands daily.

The inevitable question: Where will the climb end? Clearly the market so far had risen on buying by investors who anticipate an economic recovery. Poor first-quarter earnings had been expected—and discounted—by investors. The latest signs that a real economic upturn is under way could only lead, most Wall Streeters felt, to a continued upsurge in the market. Some were betting that the market would hit 725 before it leveled off.