Stocks, Bonds Advance Again; Dow Rises 3.75

Stock prices rose for the second straight session Thursday as interest rates tumbled in the credit markets.

Bond prices soared after the government reported retail sales fell by an unexpectedly large 1.9% in March.

The Dow Jones average of 30 industrials, up about 8 points at its best level of the session, closed with a 3.75 gain at 1,263.69. The average climbed 6.08 points Wednesday.

Retail Sales Drop

Volume on the New York Stock Exchange reached 108.36 million shares, compared to 108.15 million Wednesday.

Before the market opened, the government reported the unexpected drop in retail sales for March. It was their largest decline in more than seven years.

Though the figure seemed to be anything but a bullish signal on the economy, it served to reinforce recent hopes for a relatively stimulative Federal Reserve credit policy and lower interest rates.

In the credit markets, interest rates on short-term Treasury bills dropped 10 to 20 basis points, or hundredths of a percentage point. Prices of long-term government bonds, which move in the opposite direction from interest rates, climbed more than $10 for every $1,000 in face value.

At the same time, the market took in stride International Business Machines’ report of an 18% decline in first-quarter earnings.

Analysts noted that IBM had given notice several weeks ago that it would have a down quarter but still expected a good showing for the full year.

IBM shares rose 1 to 126 7/8 in active trading.

Advancing issues held a three to two edge on declines in the daily tally on the Big Board. The exchange’s composite index gained 0.44 to 104.43.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 128.64 million shares.

Standard & Poor’s index of 400 industrials rose 0.77 to 200.72, and S&P;’s 500-stock composite index was up 0.77 at 180.19.

The NASDAQ composite index for the over-the-counter market added 1.36 to 280.12.

At the American Stock Exchange, the market-value index closed at 230.72, up 1.05.

The Wilshire index of 5,000 equities closed at 1,857.651, up 7.830.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,174, compared to 2,310 on Wednesday.

Bond-market participants appeared to consider the decline in retail sales as a sign that the economic expansion is cooling off, something that could reduce upward pressure on interest rates.

In the secondary market for Treasury bonds, prices of short-term governments jumped 13/32 point, intermediate maturities rose by between 5/8 point and 1 point and long-term issues were up 1 points, according to Salomon Bros.