NEW YORK — Stock prices careened like a wild roller coaster today, surging to unprecedented levels and then plunging in record-heavy volume that marked one of the most volatile days in Wall Street history.
The Dow Jones average of 30 industrial stocks, 64 points higher by early afternoon to the 2,209 level for the first time ever, tumbled more than 110 points within an hour. It then stabilized, rebounding briefly and headed down again closing off 43.87 at 2,101.80. This was the fourth biggest one-day drop ever.
Volume was a record 302.39 million shares, compared with 188.86 million Thursday.
'Its Just Insane'
"I've never seen a day like this in my life. It's just Insane," said Robert O'Toole, manager of over-the-counter trading at Shearson Lehman Brothers Inc. in New York. "We had a 110-point swing in the Dow. I've been in this business for 30 years and I've never seen that before.
Volume on the New York Exchange surpassed 263 million shares as of 3 p.m. EST, easily topping the previous record of 253.12 million set Jan. 15.
The volatility came one day after the Dow Jones industrials rose a record 51.60 points. Broader market barometers also rose sharply reflecting an enormous New Year interest in stocks over other investments.
Wary Investors Jump
Much of the advance has been attributed to buying by investors who had been wary about getting into the market during the New Year rally, but increasingly are afraid of missing out on a prolonged advance.
"There's a lot of money still out there, so that every time it (the Market) backs off that money finds its way in here," said Hildegarde Zagorski, an analyst for Prudential-Bache Securities Inc.
Analysts also said some Wall Streeters may have been heartened when the West German central bank cut its discount rate by a half percentage point. Some economists believe the move could help stabilize the plunging dollar, Thus lessening chances of high U.S. inflation.
Traders said institutions were doing most of the buying and investors seemed determined not to miss out on a rally that has boosted prices on all but one trading day this year.
"This market is rewriting the record books and everyone is saying it's a one-in-a-lifetime phenomenon," trader William Schneider of Kidder Peabody said.
"I get a sense that larger and smaller investors are just throwing money at stocks," said Chris Callies of Dean Witter Reynolds. Thursday's big advance showed "some sort of buying panic."
Technical analysts have been predicting a pullback to correct for the long string of gains.
"This (decline from the highs) might have been a shakeout, but the market's not going to give up this easily," Callies added.