The bull market that arrived on Wall Street one year ago has begun to flag, raising doubts about its longevity, but even if the stampede is over it will be the standard by which to measure future bull markets.
* It set a new standard for trading volume: on the New York Stock Exchange, 60-million-share days, which before would have been considered stupendous, are now looked on as moderate. Since the market began its climb on Aug. 13, 1982, trading volume has topped 100 million shares on 52 days, and has gone as high as 149.38 million.
* It carried stock-price averages to their highest levels ever. The Dow Jones Industrial Average of 30 "blue-chip" stocks on the NYSE pierced the 1,000 level in October, then climbed to 1,100 in February, passed 1,200 in April and reached 1,248.30 on June 16, a rise of about 60 percent. An even broader gauge, the Wilshire index of 5,000 stocks on all three major markets, jumped 74 percent during the same time.
* It also made thousands of investors rich (on paper, at least) and improved the mood of many others, which some analysts say has encouraged consumer spending. And it has enabled hundreds of privately owned companies (as well as many established publicly owned ones) to issue stock to raise money to grow. In these ways a rising stock market can add enormous energy to economic expansion.
One of the factors giving the stock market its initial boost, analysts believe, were signs and predictions of lower interest rates. Now rates appear to be on the rise, and that is being blamed for the recent faltering of the stock market, which has fallen from its June 16 peak to 1,182.83, its close Friday.
Nevertheless, the happiness spread by the bull market is still felt, and nowhere more keenly than among brokers, who--like lawyers, investment bankers and casino operators--win as long as there's action. By one measure, brokerage houses were the biggest beneficiaries of Wall Street's boom.
Data accumulated last week by the rating service Standard & Poor's indicates that of the 83 stock groups that S&P charts, the biggest gainers between August 1982 and August 1983 were brokerage firm stocks.
That sector, represented by the securities of five major brokerage houses, rose 255 percent over the past year, well above the second highest group, the stocks of communications equipment manufacturers, whose selected stocks rose by about 190 percent.
Moreover, the performances of the three major stock exchanges, the mutual fund industries and the investment advisory business have never been stronger. By early July, trading on the over-the-counter market, for instance, surpassed last year's record-breaking volume of 8.4 billion shares. In addition, the mutual fund industry, according to Wiesenberger Investment Companies Service, has never been healthier, with the funds watched there reaching an all-time assets high of $105.5 billion.
But stock market students say investors could have made money over the past year simply by tossing darts blindly at a target board and, in fact, the worst performing group S&P watches, a group of entertainment stocks that includes market dud Warner Communications Inc., gained 0.7 percent.
For when the market turned so sharply in August 1982 with a perceptible shift in the interest rate environment, the whole market and those institutions and individuals who invest in it actually won, too, helping lead the economy out of its deepest recession since World War II and erasing the deep gloom that pervaded the investment community. Until that mood was dispelled, the investment community had been stung by the failures of two government securities firms and worried about looming federal budget deficits and record interest rates.
Once a target of President Reagan's barbs, Wall Street suddenly became an ally as the market boom markedly brightened the administration's prospects, becoming a leading indicator of an improved economy.
Although skeptics note that in terms of 1967 dollars the value of the Dow industrial average at 1,200 is actually only about 409 in real terms, there is little doubt that the market's improved position means that the portfolios of institutions and indviduals have been greatly strengthened.
Beyond that is the psychological impact of soaring market averages, headlines describing record stock prices, and television pictures of buoyant traders on the floor of the New York Stock Exchange. "Whenever the market goes up, people feel wealthier," said Monte Gordon, a vice president of The Dreyfus Corp.
According to data accumulated by Dean Witter Reynolds Inc., households at the end of 1982 held about $1.3 billion in corporate securities, more than triple institutional holdings, and those assets appreciated by about $500 million from August 1982 to last May.
"Clearly, the assumptions about these things have to be simple, but in a very real sense the stock market has raised the value of household assets," said Francis H. M. Kelly, senior vice president at Dean Witter Reynolds Inc.
The bull market also has been a boon to business. Never before have large corporations raised so much money in the equity market, improving their troubled balance sheets and clearing the path for potential capital spending and industrial expansion.
And never before have smaller firms done as much in marketing initial public offerings than they did in late 1982 and early 1983. "Companies are clearly more capital-sufficient and that has definitely had a positive impact on the economy," said Greg A. Smith, research chief at Prudential-Bache Securities Inc.
Through the first five months of the year, these initial stock offerings were coming into the market at a monthly average of $700 million, more than six times greater than the 1982 figure and more than double the $305 million monthly average for 1981, the last year the new market displayed vibrancy.
At the same time, companies already public are moving forward with new offerings at a record clip. New issues are hitting the market at a rate of about $42 billion a year in 1983, more than five times the figure for 1982.
Even with those results, the balance sheets of the nation's corporations, particularly those in troubled industries, remain in poor shape, and Salomon Brothers Inc. predicts that U.S. businesses "are likely to be exposed to serious credit risks" through the rest of the deacde. "There are plenty of problems out there," James Balog, director of research at Drexel Burnham Lambert Inc., said of the condition of the nation's corporate balance sheets.
And despite the classic view of consumer wealth, it is impossible to get any clear sense of who directly, besides the brokers, has profited from the stock market's gains, although speculation on the subject is one of Wall Street's favorite pastimes. "The significance of the bull market, other than to the morale of senior executives whose options and portfolios in their companies are worth more, is clearly indirect," said Dean Witter's Kelley.
There is little doubt, however, that the market has helped upper-income individuals, as opposed to the wealthy who are virtually unaffected even by steep recessions. Most economists say it is the so-called upper income group that sees its fundamental financial picture improved when the market is strong and that it is this group that moves forward with ambitious spending plans as the economy and the stock market emerge from their doldrums.
"It's interesting that over the past year that sales of Jaguars and Mercedes have gone up almost 100 percent," observes Prudential-Bache's Smith.
But Gordon of Dreyfus, for one, points out that last month's slight but surprising retail sales drop and, perhaps, even the recent steep pullback in stock prices, indicate that the public is not yet totally convinced that both the market and the broader economic rebound are for real. Not until consumers begin buying durable goods, those big-ticket items that last over time, will he be convinced of the public's sentiment.
Moreover, a full 20 percent of the nation's investment managers, polled regularly by analysts, have turned "bearish" about stocks as interest rates have risen and the market has retreated. The Dow industrials have lost 65 points of their gains, while the Wilshire index is off about 6 percent since it reached a June high.
Whether the market's current sag is an indication of a major turnaround or whether the bulls are merely hybernating at the beach, Wall Street participants will long remember both the market's 1982-1983 move and the recession whose end it signaled.
"This recession was very deep and very long and it left very deep scars," Gordon said. Consumers "are not likely for some time to throw off that yoke of worry they lived with for a long time. There is still a lingering uncertainty, but there is no question that attitudes have improved."