The Wild One

In a week that left even Wall Street professionals bemused and confused, the stock market bobbed down, up, down like a Yo-Yo--and to as little apparent purpose. When the hectic action ended, the Dow-Jones industrial index stood nearly six points above its level at the beginning of the week--but more than 50 points below its level in mid-March.

Leading the pack in both directions was International Business Machines, the glamour blue chip that some Wall Streeters claim is "not a stock but a religion." IBM opened the week with a spectacular 31 1/2 drop to $454, and the following day--apparently because of an extraordinary number of stop-loss orders--fell another 24 points with such rapidity that trading in the stock was suspended three times. But before the market closed, bargain hunters moved in and drove IBM shares back up 32 points to $462. By the end of the week, successive rallies had boosted the price to $486, 1 1/2 points above where it stood in the first place.

What accounted for these wild gyrations, seemingly unrelated to any visible economic or political developments? The majority of Wall Street analysts, pointedly noting that at $486 IBM is selling for 50 times the corporation's estimated per-share earnings, had a simple explanation: it had finally dawned on the investing public that many stocks were greatly overpriced. Other analysts, noting that stocks have long been overpriced compared with corporate earnings, argued that it was all the fault of the steel price crisis and mounting investor fears about President Kennedy's attitude toward business in general.

Whatever the explanation, almost no one found any great comfort in the fact that the Dow-Jones averages ended the week higher than they had started it. To Wall Street professionals, the modest recovery was flawed by the fact that higher prices were accompanied by a decline in trading volume to 3,010,000 shares a day. Warned Edmund Tabell of Walston & Co.: "The market is not going to go up right away. It might go lower again."

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