Investor uncertainty about political developments abroad as well as an array of mixed economic signals from the US government is spelling a period of turbulence for Wall Street.
Still, the market last week ended on an upbeat. The Dow Jones industrial average closed at 881.48, up 5.63 points. Trading througout the week was heavy -- so much so, in fact, that the total volume of 272.8 million shares turned the five-day period into the second-busiest trading week in history. The record week was posted Jan. 18.
Its was a "very puzzling week," said Robert Wolf, associate manager of the Alexandria, Va., office of A. G. Edwards & Sons. "There are all kinds of economics negatives right now. But on the other hand, apparently a lot of people, including big institutional investors, believe the economy will continue to do well because of stepped-up defense spending," he says.
"There are so many cross currents going on now," Mr. Wolf laments, that it is difficult for the investor to get a "real fix" as to exactly where the economy is heading.
In addition to what many political analysts here describe as a dangerous US buildup in the Middle East, many market-watchers had mixed feelings about the Carter administration's budget for fiscal year 1981 of $616 billion, announced last week. Liberals are grumbling that it is too lean, while conservatives fret that it will worsen inflation.
at the same time the government, in its Economic Report of the President and the annual report of the Council of Economic Advisers, maintains that the economy is still heading into a recession. Moreover, the two documents suggest that, without a continuing prudent mix of monetary-fiscal policies, the current double-digit inflation rates could become entrenched.
The Commerce Department reported that new factory orders increased 1.3 percent to a seasonally adjusted $148.5 billion in December. That would be considered good news. But on a grimmer note, the Labor Department announced that the jobless rate in January surged to 6.2 percent, from 5.9 percent.
What did all the conflicting currents mean? No recession yet? Recession still down the road, or postponed indefinitely? No one seemed to be certain, even as the United States seemed to be moving toward a new period of cold war with the Soviet Union.
Last week was "very, very frustrating," says Alex Heckman, vice-president of the Washington offices of Bache Halsey Stuart Shields Inc.
Mr. Heckman points out that Wednesday, Jan. 30, "was an outstanding day. On Thursday it looked like the market would penetrate the 900 level. But then we wound up with one of the busiest trading days in the history of the market." Volume on the New York Stock Exchange that day (Jan. 31) reached 65.9 million shares, as traders and institutions sought quick profits. It also turned out to be the third time in three weeks that the market tripped on the 900 range.
For the week as a whole, big winners included large oil companies, such as Exxon, Standard Oil of California, Texaco, Standard Oil of Indiana, Tosco, and Clark Oil & Refinery. Others benefiting from the international crisis are defense and computer-related issues.
By contrast, buyers were clearly wary of many consumer-related issues, which could be adversely affected by recession and rising unemployment.
The heavy trading in the market is mainly by large institutional investors, James Logan, senior vice-president of Ferris & Co., points out. "Here in Washington we're getting only a small trickle of new investors," he says.