The nation's financial markets, in what one trader called a maniacal mood, lost momentum late today and pulled back from early gains in record-breaking trading.
New York Stock Exchange volume smashed records, leaping to 133 million shares, almost 40 million shares above the old record. But the Dow Jones Industrial Average finished the day down 1.81 points at 829.43 after being up about 18 points twice earlier in the day.
"The market could not go up so fast," said Newton Zinder of E.F. Hutton & Co. Inc. "There was too much exuberance at the opening today to be sustained," he added. "There was too much too soon."
"A few doubting Thomases and profit takers came into the market today and put a damper on things," Jerry Hinkle, chief trader at Sanford C. Bernstein and Co. said facetiously.
After early increases that mirrored stock market gains, the bond market also closed lower. Government securities fell, and corporate bonds dropped from their early gains, either unchanged or off by up to half a point.
"It was only natural that there be some pullback, but I think what the bond market is doing here is for real," said Sanford I. Weill, chairman of Shearson/American Express.
Early buying, fed by an influx of foreign buying, pushed stocks so high so quickly that the rally could not be sustained. About 36 million shares were traded in the first hour of Big Board trading today, another market record, and by 11 a.m., industrials were up almost 18 points.
Institutions, which jumped so deeply into the stock market yesterday when industrials rose a record 39 points, may simply have run out of cash. "The rally seems to have reached an emotional peak," said Richard Yashewski, senior vice president of Butcher & Singer Inc. "It takes a big hook to catch a big fish, and it appears that the institutions, with their buying panic, got hooked. We think the market was as bearish today as it was bullish yesterday."
The markets' steep climb yesterday was pushed by cuts in bank prime lending rates and the news that Salomon Brothers Inc. economist Henry Kaufman and First Boston Corp. economist Albert M. Wojnilower had revised earlier forecasts and predicted significant drops in interest rates.
Yet today's market performance indicated that Wall Street, while buoyed by the prospects of lower interest rates, hadn't forgotten the reason for the decline in rates -- a fundamentally weak economy.
"Really, how much different are things than they were a couple of days ago?" asked Victor T. Melone, chief investment officer at Manufacturers Hanover Trust.
The volume on the New York exchange was among the things that have changed, rising to 132.6 million shares from yesterday's 92.8 million. More than 1,200 stocks advanced, while 480 declined; 208 stocks hit new highs and nine marked new lows.
The American Stock Exchange Index, with several energy stocks leading the way, today jumped 3.64 points to 247.94. Volume on the Amex rose to 9.1 million shares from 6.3 million shares yesterday, as 481 stocks advanced and 167 declined.
The over-the-counter market picked up today after getting little attention during the historic market leap yesterday. The NASDAQ composite index rose 2.71 points to 164.99.