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Thursday: Dow in the Fast Lane; Ralph Lauren IPO Is All the Rage

By John J. Edwards III
Staff Reporter

The turbocharged stock market looks to have plenty of gas left this midday, with the

Dow Jones Industrial Average

passing century marks like a Lamborghini passes mileposts. Dow 7600? Fugedaboudit, as we say here in New York. The blue-chips have roared past 7650 and are speeding toward 7700, with no checkered flag in sight.

"It's totally the bond market," one trader said. A surprisingly weak May retail sales report has sent bonds rocketing, with the yield on the bellwether 30-year Treasury bond diving to 6.77%. "The economy is looking great," the trader went on. "People want to be fully invested before the end of the quarter, before they report their mutual fund holdings."

Tech continues to go the other way, with the

Nasdaq Composite Index

hanging around break-even after downgrades on


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and other stalwarts.

A low-tech staple, clothing, is generating some of the biggest excitement on Wall Street today as

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Polo Ralph Lauren

(RL:NYSE) makes its Big Board debut. The offering of about 30% of the upscale design house was priced at 26, above its 22-to-25 range, and has traded as high as 33 before settling back to 31 3/8.

Is it worth it?

Goldman Sachs

, which was lead underwriter on the offering and holds a 28% stake in Ralph Lauren, paid $135 million for that stake in 1994. That valued the overall company at $482.1 million. Investors who bought the stock at 33 today believed the company was worth a whopping $3.25 billion -- 6.7 times its supposed value three years ago.

Kurt Barnard, head of

Barnard Retail Consulting Group

in Scotch Plains, N.J., said the valuation may be a little rich based on RL's past performance but fairly reflects its growth prospects. "In the past five years Ralph Lauren has experienced virtually exponential growth every single year, and there's no reason to think this growth is going to slacken anytime in the near future," he said.

Barnard said Ralph Lauren is definitely more of a



-- up about 50 to 72 5/8 since its October 1995 IPO -- than a

Donna Karan International

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-- down about 8 to 12 1/4 since its October 1996 IPO. But one trader wasn't so sure.

"I'd like to short Ralph Lauren," he said. "Gotta wait until it settles down a little bit, though." He acknowledged RL's solid management and strong appeal to the retail investor, but he invoked a common Wall Street mantra: "Fashion stocks don't go up forever."