On the eve of the fifth anniversary of the bull market, stock prices rocketed to new highs yesterday, sending the Dow Jones industrial average over the 2600 mark for the first time.
After a relatively quiet day, the New York Stock Exchange burst into activity in the final hour as buyers began pouring money into the blue chip stocks that have dominated the market. The closely watched Dow industrial average posted its eighth-biggest day ever, leaping 43.84 points to close at 2635.84, a gain of 1.7 percent.
At the beginning of the year, the Dow stood at 1895.95, giving the market a gain of 739 points, or 39 percent, since then.
The Dow closed above 2600 only 15 trading days after crossing the 2500 mark on July 17.
The current bull market began on Aug. 12, 1982, when the Dow moved off its low of 772.21 and kept on going.
Volume on the NYSE totaled 187.20 million shares, considered moderate for a day when prices were moving sharply higher. Advancing stocks outpaced losing stocks by less than 3 to 1.
The NYSE index was up 2.58 to 183.45, its third record in a row.
Standard & Poor's index of 400 industrials rose 5.68 to 383.89, and S&P's 500-stock composite index was up 5.45 to 322.64.
At the American Stock Exchange, the market value index rose 1.68, to a record 362.74. The Nasdaq composite index for the over-the-counter market closed at 446.27, up 2.69.
Wall Street analysts said the market surge appeared to mark the end of a period of nervousness over events in the Persian Gulf and reflected renewed expectations for a rally in the bond market. Reports that a U.S. Navy jet fired a missile at a radar contact thought to be an Iranian plane came after the market closed.
Michael Metz, market analyst at Oppenheimer & Co., said stock prices began to move up after investors who were waiting for the market to turn down decided it wasn't going to happen.
"Most of the investors have too much cash to stay out," Metz said. They were joined by foreign investors, he said.
Like many analysts, Metz said it was difficult to relate the current prices of stocks to their underlying values. "But this is an extraordinarily powerful market and too many people have missed it," he said.
Eugene E. Peroni Jr., market analyst at Janney Montgomery Scott, said that yesterday's rally had all the earmarks of a situation in which investors, faced with rising prices, decide to "throw in the towel and participate at any cost."
Peroni said that while he remains cautious on the market, "It is still too early to cry wolf. I'd continue to ride the crest of the trend and pare down securities that are not participating."
Charles S. Comer, market analyst at Moseley Securities Inc., said the late buying spree was "a sign of relief" among investors who had been staying out of the market in recent days because of assorted worries. "A big piece of the buying was pent-up demand," Comer said.
The Associated Press reported the following action in individual stocks: IBM closed up 2 3/8 166 3/4; Digital Equipment was up 4 1/8 at 175 and Unisys was up 7/8 at 45 3/4.
AT&T gained 1, to 34 3/4, while General Electric gained 1 1/2, to 61 7/8.
Merck picked up 5 1/8, to 196 3/4; Abbott Labs was up 1 7/8 at 64 1/2 and Pfizer was up 1 at 75 1/2.