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...this year than the stock market. For nearly six months, prices on Wall Street have climbed steadily higher, higher, higher as investors have shifted more and more cash into the market in anticipation of a brisk business upturn later in the year. Last week this confidence helped propel the Dow Jones industrial average up another 17.68 points, to a new 1975 high of 873.12. While that is still well below the Dow's alltime peak of 1051.7 in 1973, it nonetheless represents a hefty 50% rise since last December. No fewer than 225 of the 1,549 issues traded...
Underlying all of the institutional buying is greater confidence that the economic recovery now taking shape will continue and that the market is not just enjoying a temporary spurt before the Dow worries itself back down to the 500s. Warnings that prices will collapse again can still be heard along Wall Street, chiefly among chartists. But they are outnumbered by newly optimistic money managers who predict that the industrial average will at least break through 900 by year's end, though probably not without a downward stumble of 10% to 25% in stock values at some point along...
Besides hammering share prices down, the recession almost destroyed the original and highly essential function of the stock market: that of enabling companies to raise capital. As the Dow Jones industrial average tumbled to a twelve-year low of 578 last December, investors' confidence was so shaken that hardly any companies could hope to raise money by selling newly issued stock. Now, with the Dow back to 855 (up 31 last week) and investor enthusiasm rising, American companies in search of funds are once more finding a market for new shares...
Wall Street is in good shape to withstand the intensified competition. Helped by heavy trading volume, member firms of the N.Y.S.E. scored a record profit of $287.9 million in the first quarter. And the Dow Jones industrial average, spurred partly by traders' hopes that new rivalry on commissions would bring more small buyers back into the market, spurted 36 points last week, to close at an eleven-month high...
...Street could be short-lived. As American Stock Exchange President Paul Kolton put it cautiously last week, "You can't have three good months and say it [Wall Street's tailspin] is over." But brokers nonetheless have good reason to feel happy. Prices for stocks in the Dow Jones industrials are up 30% so far this year, and even long-suffering mutual funds are doing nicely. Once again, brokers are making money. Figures to be released soon by the New York Stock Exchange will probably show that its 425 member firms earned pretax profits of around $300 million...