NEW YORK — The stock market chalked up its third straight gain Monday amid hopes that lower oil prices would give a lift to the economy.
The advance stood up even though oil prices rebounded a bit in commodity markets after their sharp decline of late.
The Dow Jones average of 30 industrials, up a combined 27.64 points last Thursday and Friday, climbed another 7.68 to 1,537.61.
Volume on the New York Stock Exchange came to 122.93 million shares, down from 128.93 million on Friday.
Analysts said the recent slide of world oil prices continued to dominate traders' attention.
At first, the drop was seen by many Wall Streeters as a cause for concern, especially about the financial health of banks with large portfolios of energy loans. But, toward the end of last week, investors began to put greater emphasis on the positive prospects that it raised for reduced inflation and an accompanying chance for further declines in interest rates. Some economists have made the point that lower energy costs might stimulate the economy with as much force as a cut in taxes.
Mortgage, S&L Stocks Jump
That helped spur buying of mortgage and savings and loan stocks, which are often very responsive to changes in interest-rate expectations. Federal National Mortgage gained 1 to 26, Great Western Financial 2 1/8 to 37 7/8, Golden West Financial 1 1/8 to 35 3/8, Transohio Financial 3/8 to 15 and H. F. Ahmanson 2 1/8 to 56 1/2.
Among the oil issues, Exxon rose 3/8 to 51, but Chevron dropped 7/8 to 35 5/8, Atlantic Richfield lost 1 1/2 to 54 3/8 and Mobil was down 3/8 at 29.
Arco said it agreed with the Energy Department to pay $315 million in restitution and fines for alleged violations of federal oil price controls from 1978 until 1981, and it reported lower quarterly earnings.
In the airline industry, which stands to benefit from lower fuel costs, prices finished mixed after some strong gains of late.
Merrill Lynch was actively traded, down 2 3/8 at 38 1/8. A Barron's magazine article questioned the plausibility of recent takeover rumors involving the company.
Sears, Roebuck & Co., subject of favorable comment in the same publication, rose 1 5/8 to 38 5/8.
Gainers Top Losers
In the overall tally on the Big Board, about three issues advanced in price for every two that declined. The exchange's composite index added 0.55 to 119.87.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 148.79 million shares.
Large blocks of 10,000 or more shares traded on the NYSE totaled 2,566, compared to 2,517 on Friday.
Standard & Poor's index of 400 industrials rose 0.79 to 228.87, and S&P's 500-stock composite index was up 0.96 at 207.39.
The Wilshire index of 5,000 equities closed at 2,144.892, up 9.338.
The NASDAQ composite index for the over-the-counter market gained 1.35 to 330.10.
At the American Stock Exchange, the market-value index closed at 244.17, up 0.42.
In the credit markets, government bond prices gained as traders weighed the chances that interest rates will move lower. The Treasury's 20-year bond jumped nearly 1 point, or about $10 for every $1,000 in face value.
Corporate and municipal issues also rose.
Discount Rate Speculation
Reports circulating that the Japanese central bank might reduce its discount rate soon have generated discussion in the credit markets over what, if anything, the United States would do in response. Speculation has centered on whether the Federal Reserve Board would respond by cutting the U.S. discount rate, which has stood at 7.5% since last May. There has been no official statement from the Japanese government.
In the secondary market for Treasury securities, prices of short-term governments rose 1/8 point, intermediate maturities rose from point to 1/2 point and long-term issues spurted 5/8 point to 1 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, went up 0.31 from late Friday to 110.51. The Shearson Lehman index, which makes a similar measurement, rose 3.40 to 1,159.07.
Among corporate issues, industrials rose 3/8 point and utilities gained 3/4 point in quiet trading.