Dow Skyrockets 44.64 as Traders Snap Up Stocks : Big Board Volume Reaches 278.13 Million Shares, the Second-Highest Ever

NEW YORK —  The stock market’s dizzying ascent into the record books accelerated in a stampede of buying Tuesday, sending the Dow Jones industrial average to its seventh record close in 11 sessions.

The closely watched index soared 44.64 points to close at 2,680.48 as traders swarmed to buy just about everything in sight, fearful that they might miss out on a rally that shows no sign of letting up, analysts said.

What started out as a buying spree turned into so-called panic buying as investors snapped up every stock in sight for fear of missing out on the 5-year-old bull market’s anniversary rally, brokers said.

On July 28, the index stood at 2,519.77. Since Jan. 1, it has picked up 784.53 points, for an overall gain of 41.4%.

Volume on the New York Stock Exchange hit a stunning 278.13 million shares. That was second only to the record 302.39 million shares that traded hands on Jan. 23 of this year, and far above the 266.54 million shares of April 14, now the third-highest trading day in history.

Monday’s Big Board volume totaled 187.20 million shares.

Once again, analyst said, no specific news events kicked off the stampede. Rather, it was a question of the market’s building on its own momentum.

“What we’re seeing is capitulation by the short-term bears, the skeptics and the shorts, who have been looking for a correction so they can buy in at comfortable levels,” said Alfred E. Goldman, an analyst at the A. G. Edwards & Sons securities firm.

By “shorts” Goldman was referring to the legion of traders who, believing that stocks were about to decline, had sold borrowed shares in hopes of buying them back at cheaper prices.

When prices continued to rise, they were forced to buy more shares to cut their losses, thereby contributing to the overall upsurge.

Aside from its own steadily accelerating momentum, one strong force in the market has been an influx of foreign money. This has been attracted to U.S. securities--and especially blue chips--by the stable dollar and fears of rising interest rates, which would diminish the value of fixed-income securities.

“The foreign investors have an insatiable appetite for American blue chips,” said Alan Ackerman of Gruntal & Co.

On Tuesday, however, there was widespread buying from elsewhere as well, analysts said. And while blue chips continued to attract much of the attention, buying was spread throughout the market.

Michael Metz, an analyst with Oppenheimer & Co., said portfolio managers jumped on the bandwagon today, committing huge amounts of cash that had been held on the sidelines.

“Leadership was broad-based across the board in every sector--retail, publishing, drugs, paper--by major institutions, secondary institutions and individuals,” said Jack Baker, head of block trading at the Shearson Lehman Bros. securities firm. “The Japanese were good buyers, the British were good buyers, the Swiss, too.”

On the NYSE, advancing issues outpaced declining issues by about 2 to 1, with 1,034 stocks up, 562 down and 401 unchanged.

The session started out fairly strongly and continued with the Dow index in double digits all day.

“The shorts got nervous, those on the sidelines got nervous, and this led to a feeding frenzy in the last 10 minutes,” Goldman said. In this strategy, professionals trade off differences between futures contracts and their underlying “baskets” of stocks.

AT&T; led the Big Board’s most-active list at 35 3/8, up 5/8; IBM was up 2 at 169, and National Semiconductor was up 1/2 at 15 1/8.

The NYSE index was up 2.68 to 186.13, its fourth-straight record.

The bond market also got a slight boost from the booming stock market. “The increased flow of Japanese and other foreign money (into stocks) is having some spillover effects,” said Elliott Platt of Donaldson Lufkin & Jenrette.

Also helping bonds was a slight softening in the federal funds rate--the interest on overnight loans between banks--which traded at 6.44%, down from 6.50% Monday, according to the investment firm Salomon Bros.