1 066 & All That

Wall Street greeted the July 4 weekend with a bang. After going nowhere for six puzzling weeks, the Dow-Jones index of industrial shares reached new records in four out of five trading sessions, climbed 101 points for the week to close at an alltime high of 841.47. The gain was all the more impressive because the market is usually sluggish just before a warm-weather holiday. By crossing the 840 mark, which brokers had viewed as a psychological hurdle, the market appeared well poised for further advance.

Whether they called it "the Johnson Market" or "the Blue Chip Market," most Wall Streeters thought that the averages were healthy, substantial and well based. Small investors are coming back; during the past fortnight, about 7% more purchases than sales of odd lots--fewer than 100 shares--have been made. Other bright signs: four stocks rose for every three that fell, and the whole market was led up by the shares of the nation's biggest, most broadly owned companies.

The Leaders. Nine issues in particular have spurred the 30 stocks that make up the Dow-Jones average. The greatest upward momentum was provided by American Telephone & Telegraph, whose shares have moved from 691 to 741 since they were split a fortnight ago. Chrysler and General Motors have also been front runners, helped by last week's report that U.S. automakers built 13% more cars in June than in the same month last year. All those cars sent up demand for gas and oil, buoying the shares of Texaco, Jersey Standard and California Standard. The other significant gainers in the Dow-Jones have been Du Pont, International Harvester and Sears, Roebuck--the latter lifted by the upswing in retail sales since the tax cut.

The rise in consumer spending has also given new luster to grocery chains, department store groups and clothing producers. In addition, brokers now favor the rails, utilities and steels, whose production is expected to meet or exceed the 1955 record of 117 million tons. There is declining enthusiasm for the recently popular airlines, which are leveling out after a sharp climb, and the cement companies, which have suffered from trouble signs in the construction market.

Higher Earnings. Some brokers look for a brief slump before the next surge, but few think that the market is overpriced. Two-thirds of the Dow-Jones stocks are selling below their 1956-61 bull market high, although profits are now much higher. The Dow-Jones shares are selling on average for only 191 times earnings, well down from 23 times earnings in early 1962.

The market has climbed 300 points in the past two years, and most Wall Streeters expect the trend to continue. Brokers still expect the Dow-Jones to reach 880 or 900 by year's end. And Arthur Wiesenberger of Wiesenberger & Co., a bull with one of the best forecasting records, predicts that the Dow-Jones will reach a neat 1066 by 1966.

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