Back to the 900s?

The new year was scarcely three weeks old, and its step on Wall Street seemed springy indeed. With a burst of daily trading that surprised brokers--a daily average of 9,544,000 shares v. 7,500,000 last year--chart lines for the New York Stock Exchange pointed almost steadily upward. Boosted at midweek by a one-day gain of 10.41 points, the Dow-Jones industrial average finished the week 12.03 points higher than it began. Overall, the industrials had risen 61.47 since the year began, stood at week's end at 847.16, or as high again as they were last August. Some brokers predicted that the industrial average, which dropped out of the 900s last May, might burst back in again by March.

Ranging Progress. What impressed the experts was that the advance ranged across just about every sector of the market. In 14 consecutive sessions, gains by individual stocks outnumbered the declines, and many a stock in the course of the week hit a new high, not merely for 1967 but for 1966 as well. Blue chips Du Pont, Bethlehem Steel, Procter & Gamble and even beleaguered A.T. & T. went up; so did glamor stocks Itek, Scientific Data and Ampex. Where there were big drops, there was an obvious reason. American Broadcasting Co. fell 141 points following an announcement in Washington by the Justice Department that it would oppose the merger of ABC and International Telephone & Telegraph (ITT, on the other hand, finished the week 1 point ahead).

There were many apparent reasons for the rise. One was the fact that investors who sold short in December for tax purposes now had to cover. Short-interest holdings--including large blocs in Douglas, RCA, Sperry Rand, Fairchild Camera and Gulf & Western-hit a 35-year high in December. The short-interest total began dropping--it was 2,000,000 shares lower at the beginning of last week--as the short sellers began covering themselves in a rising market. Buying also were mutual funds, which had kept about $3 billion liquid and ready during an uncertain autumn and now moved in with some of it to pick up favorites.

Outside Help. The climb, to be sure, was not all due to internal causes. Much of it has come since President John son's State of the Union message; along with such bitter pills as higher taxes, the President also promised such palliatives as easier money and spoke against the wartime wage and price controls that Wall Street fears. In addition, last week came predictions from Washington that last year's sharp rise in consumer prices was likely to ease off this year, which also pleases the Street. By March, if the market does indeed roll into the 900s on its own momentum, there seemed a likelihood that a stable economy might keep it rolling.

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