Oil, Computer Stocks Sag; Dow Declines 2.57

NEW YORK —  Weakness in the oil and computer sectors dragged the stock market lower in sluggish trading Monday, although prices recovered from their lows of the session. Computer, mining, paper and airline stocks also retreated.

The Dow Jones average of 30 industrials slipped 2.57 to 1,298.39 after having been down 7.50 points at midday. Still, the measure has surrendered 28.89 points over the past seven sessions.

Losers overall led gainers by about four to three on the New York Stock Exchange.

Big Board volume slowed to 82.17 million shares from 93.09 million Friday.

Stock prices remained on the downside throughout the session.

Some credit analysts argue, however, that earlier credit-easing moves by the Fed and rapid growth in the nation’s money supply has already set the stage for stronger economic expansion.

Oil stocks came under pressure from reports of further declines in world crude oil prices.

Industry sources said that Mexico--the largest single source of foreign oil for the United States--told customers that it is cutting the price of its lower-quality Maya crude by $1.50 a barrel to $24.

Price Drop Predicted

Earlier in the day, Saudi Arabia’s oil minister, Ahmed Zaki Yamani, was quoted as saying that, unless OPEC members started complying with the cartel’s price and production limits, oil prices could drop below $20 a barrel, a drop of 30% from current official prices.

Analysts said the problem faced by the Organization of Petroleum Exporting Countries is especially serious because oil markets have failed to stabilize even though OPEC has reduced its production to the lowest level in 20 years.

Exxon dropped 1 1/8 to 52, Amoco fell to 59 3/8 and Kerr-McGee lost 3/8 to 29 1/8. But Texaco gained to 37 7/8.

Computer stocks tumbled after two more computer makers, citing the industry’s sales slump, announced major cost-cutting moves.

Data General, down 1/2 to a 52-week low of 32 3/4, said that it plans to lay off 1,300 workers and that it might post a loss for the quarter ending June 29. Hewlett-Packard, off 1 to 32, said it will close most of its U.S. facilities for one week in July.

Analysts have said technology stocks are particularly vulnerable this month because the continuing bad news about the computer and semiconductor industries is prompting institutional money managers to sell the stocks in order to protect the second-quarter performances of their portfolios.

Sperry, topping the NYSE’s active list, plummeted 4 1/8 to 51 3/8 and Burroughs gained 7/8 to 56 1/8 after the companies said they dropped merger talks.

UAL, the parent of United Airlines, fell to 54 3/8. After the close, UAL said it agreed to acquire RCA’s Hertz Corp. car rental unit for $587.5 million. RCA fell 1 1/8 to 44 1/8.

Bond prices rallied amid the prospect of further declines in interest rates and lower oil costs.

In the secondary market for Treasury bonds, prices of short-term governments rose 5/32 point, intermediate maturities gained 21/32 point and long-term issues jumped 14/32 points, 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.