From Record to Record

After wilting during much of the summer, the stock market began autumn last week with an auspicious performance. The Dow Jones industrial average twice established new highs, breaking the previous record of 1248.30 set on June 16. The index rose 15.25 points on Tuesday to close at 1249.19, then slipped 5.9 points on Wednesday, but went up 14.23 points on Thursday to 1257.52. It slid 1.93 on Friday to finish the week at 1255.59, up 29.88 points.

The Dow has now risen more than 90 points from its low of 1163.06 on Aug. 8, thus upholding an old Wall Street tradition: the summer rally. Market analysts say last week's upswing was due largely to the growing belief that the Federal Reserve will now let interest rates fall slightly.

The record highs were a good backdrop for the introduction of the newest stock market investment instrument: New York Stock Exchange index options. These allow an investor to speculate on general market trends by buying or selling an option on the value of the 1,505 stocks traded on the New York exchange. Stock index options, which were first introduced in the Chicago exchange in March 1983, went on sale last Friday for the New York Stock Exchange index. If the stock index option had existed last Tuesday, a trader who paid $300 for an option worth $9,709 would have made $79 on the market increase that day, but then lost $42 when stocks fell on Wednesday.

Wall Street analysts were divided, as usual, over whether the market was starting a new push upward or would slip back. Monte Gordon, vice president and director of research for the Dreyfus financial group sees more records ahead. Said he: "I think you can expect to reach the 1275 level in the middle or the end of October." But some other seers were worried about large federal deficits and higher interest rates. Said David Jones, senior vice president of Aubrey G. Lanston & Co.: "I think the market has run out of steam and won't do much better than 1250, at least by the end of the year." This file is automatically generated by a robot program, so viewer discretion is required.