Stocks Rise to New Highs; Dow Up 7.57 : Bond Prices Fall After Disappointing Treasury Auction

Stock prices closed at a record high today after a seesaw session.

The Dow Jones average of 30 industrials, which has flirted with the 1,600-point level all week, closed at a record high 1,600.69, up 7.57, the first time in history that Wall Street’s best-known indicator has closed above 1,600.

Since Wall Street’s historic rally began in September, the Dow Jones industrial average has climbed 300 points.

Interest rates rose and bond prices declined in early trading today, continuing Wednesday’s slide.

Nervousness about the Treasury’s auction of new 30-year bonds prevailed in the credit markets, analysts said.

In secondary trading, the Treasury’s benchmark 30-year bond fell 1/2 point, or $5 for every $1,000 in face amount.

Government securities dealers have been dissatisfied with the demand, particularly the modest demand of foreigners, at the first two auctions of the Treasury’s three-stage financing package. The dealers are concerned that the lack of interest in buying the debt will force yields higher, which would hurt prices.

The sale today of $7 billion in 30-year bonds concludes the borrowing operation. The two earlier auctions, held Tuesday and Wednesday, consisted of $9 billion in three-year notes and $7 billion in 10-year notes.

In the secondary market for Treasury securities, prices of short-term governments were off 1/16 point to 3/32 point, intermediate maturities fell 1/8 point to 3/8 point and long-term issues dropped 7/16 point to 1/2 point, according to the investment firm of Salomon Bros.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, moved down 0.07 from late Wednesday to 111.07. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 0.22 to 1,164.82.

In corporate trading, utilities dropped 5/8 point and industrials were off 3/8 point in quiet activity.

Among tax-exempt municipal bonds, dollar bonds slipped point and general obligations fell 1/2 point. Trading was light.

Yields on three-month Treasury bills went up six basis points to 7.08%. A basis point is one-hundredth of a percentage point. Six-month bills and one-year bills both rose four basis points to 7.12%.