Penny has just come home from the hospital. Nancy tries to urge Penny to rethink her commitment to Jeff, who has left home. Meanwhile, in a neighboring town, a woman named Meg Blaine asks Joe the bartender to give Jack Bailey (Jeff Baker's alias) a job as a piano player.
In the time following the January 3, 1961 episode of ATWT, these were the developments on the Penny and Jeff front: Penny gets a job as a feature writer for the local newspaper and works closely with editor Greg Williams. Penny dates Greg for awhile. Penny also starts seeing Tom Pope again. Meanwhile, Meg Blaine falls in love with Jack (Jeff) and helps him stop drinking. She also encourages him to write some songs. One day, Meg looks at a newspaper article about Jeff Baker and recognizes the accompanying photo as that of Jack. Once Meg tells Jack of his discovery, Jack admits that he is really Jeff Baker. When Jeff suffers from a bout with pericarditis, Meg goes to Oakdale to tell Mr. and Mrs. Baker that Jeff is ill. While in Oakdale, Meg finds out that Penny has become engaged to former fiancé Tom Pope. By late 1961, Jeff would return to Oakdale and Penny.
At this time, Ellen has just started working as a nanny for the Stewart children. One day, Ellen takes a look at the family photos and recognizes a picture taken of Danny at age six months. Ellen immediately recognizes the six-month-old Danny as the baby she gave up for adoption, and she comes up with a plan to prove it. While playing with little Danny, Ellen is able to get the boy's footprints and handprints. Soon, Ellen is on her way to Columbus to compare the prints with the birth records. The prints match, proving that little Danny Stewart is baby Jimmy, whom she put up for adoption years earlier.
It is about midnight, and Betty Stewart is quite upset. Ellen has just visited the Stewarts and confronted them with proof that their son Danny is the boy she gave up for adoption years ago. Betty wants to take the boys and leave town, but David convinces her that this is not a good idea. Meanwhile, Doug and Claire are waiting up for Ellen, who should have been back from Columbus by now. When Doug calls David, reports that Ellen has already come by his place. Doug decides he must visit the Stewarts at once. At the end of the episode, little Danny calls for Mommy because he can't sleep, to which Betty responds, "your mother's coming!"
Not too long after Bob and Lisa marry, Lisa discovers that she is pregnant. So Chris and Nancy allow the newlyweds to stay with them.
Not all is well in Bob and Lisa's marriage, however. Bob puts in long hours of work, first at a local pharmacy, then at the hospital. At home, Lisa cries, "difficult pregnancy" in order to get out of doing household chores. This situation causes tension.
During the course of 1961, Bob and Lisa's baby, Thomas Christopher Hughes, would be born.