'Buy!' orders circled the globe last week

Achetez! Einkaufen! Comprate! Buy! Brokers in the major cities of the Western world heard it from almost all quarters late last week, and the result was a surge that sent the stock market on a roller-coaster ride - first way up, then down, then rocking back and forth.

''We got reports of a European buying frenzy before the market opened,'' an institutional money manager reported Friday.

A dovetailing of events and attitudes appeared to cause Europeans, Americans, and Asians to turn bullish. Rallies moved with the sunlight around the globe Friday, with the Tokyo, Frankfurt, London, Paris, and Amsterdam stock markets showing big gains. Then came New York's turn: Up the market went, in came profit takers, down it turned. Trading volume was huge.

The key reason for the ''buying frenzy'' might be capsulized as: The market passed a crucial test.

That test came early last week. After shooting up almost 100 points the week before, the market (as measured by the Dow Jones industrial average) leveled off and took measure of how far it had come. There was good reason for caution, since the US Treasury was embarking on its quarterly financing, dipping deeply into the great pool of credit in America by offering the highest-quality bonds to investors.

This endeavor by the world's biggest borrower occurred without a hitch - and without driving up interest rates. The Treasury's 30-year bonds, which had a coupon rate of 12.5 percent, went at an average yield of 12.52 percent, down from 13.32 percent at the previous auction on May 15. That gave the bond market reason to believe interest rates would remain moderate and might be tending downward.

Then came the report Thursday that the basic money supply (M-1) had plunged $ 2.6 billion. That far exceeded the drop the market expected and gave investors reason to surmise that the Federal Reserve would not have to tighten credit conditions in the future.

Traders were inundated with buying orders from Europe. The market soared, but some big institutions had planned to sell on strength, and that caused the Dow to reverse field, closing down 5.85 for the day. It finished at 1,218.20, up 15. 12 for the week. In less than three weeks, the Dow has risen from a 17-month low. Its 1984 high was 1,286.64 on Jan. 5.

Even the hard-hit secondary-stock area has performed well. Mark Tavel, executive vice-president of the Value Line Investment Survey, which tracks a broad spectrum of stocks, notes that institutional and private investors have ''gone quickly beyond the big, liquid giants'' (the blue chips).

As fast-paced as the market has been, some market-watchers say, it is important to consider how far it has come and where the economy might be going.

Mr. Tavel is somewhat concerned with the market's explosiveness: ''It's tough to fathom. We've got an emotional binge and it is using up buying power quickly. We'd prefer to see a more gradual climb.'' Value Line has long held the position that the market is headed much, much higher in the long term.

''If you were buying three or four weeks ago, you could just think about the next few months,'' says Andrew Furtak, manager of the Minneapolis-based IDS/American Express stock fund. ''If you are buying now, you have to consider the economic profile for the next two years. From now forward the market already has a lot of expectations built into it.''

One cause for concern, Mr. Furtak notes, is whether General Motors will be hit with a big strike, in which case the economy would really slow down for a quarter. Other concerns: whether American industry will continue to build inventories as rapidly as it has; the size and ease of the Treasury's fourth-quarter funding effort; the outlook for corporate earnings in 1985.

Furtak sees enough enthusiasm from American and overseas investors to push the Dow into the 1,250-1,300 range. Then, he feels, much risk will be built in and there could be ''wild gyrations.'' As a money manager, Furtak says he appreciates the heights in this market because of the strength it gives his fund's $1.3 billion in assets. The boom also enables him to rotate his portfolio by selling less-favored stocks while they are strong.

''Even with our commitments to the market, our cash position is higher now,'' he says.

Paul E. Carlson, manager of two funds for the Boston-based Keystone Custodian group, sees segments of the market as being ''somewhat overbought,'' but Keystone, he says, ''is going along, riding the fast horse.'' His funds have been ''fully invested for some time.''

Mr. Carlson's outlook for the economy is optimistic for the foreseeable future. He describes the situation as ''the best of all worlds: rapid growth, high employment, no real inflation.'' As he sees it, the economy really doesn't need lower interest rates to do well, but he thinks that over time, as more and more of the financial world sees no big increase in inflation, interest rates may begin to fall.

That best-of-all-worlds view seems to have become fairly deeply rooted in a few short weeks. In a recent report, Burton M. Siegel, research director of Drexel Burnham Lambert Inc., pointed out that ''FUDD (fear, uncertainty, doubt, and despair) is still high but on the decline.''

''Recession in 1985 has become unlikely,'' the report says. ''Cyclical excesses which usually precede recession have not developed. Monetary policy will not be tightened while domestic inflation stays under control. Fiscal policy will be tightened, but not soon enough to impact the economy before 1986 .''

Value line's Mark Tavel notes, however, that a slowdown in the economy in '85 , even if it did not mean a recession, would still decrease corporate profits and thus stock dividends - although this might be offset somewhat if interest rates fell and stock performance improved.

Chart, Source: Bank of Boston.

Interest Rates Percent Prime rate 13.00 Discount rate 9.00 Federal funds 11.63 3-Mo. Treasury bills 10.83 6-Mo. Treasury bills 11.27 7-Yr. Treasury notes 12.66 30-Yr. Treasury bonds 12.51

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