U.S. stocks gained Monday as oil prices fell sharply after a tropical storm lost strength, relieving worries about inflation and the outlook for corporate profits.

The Dow Jones industrial average rose 67.96 points, or 0.60 percent, to end at 11,352.01. The Standard & Poor's 500 Index gained 6.69 points, or 0.52 percent, to 1,301.78. The Nasdaq Composite Index was up 20.41 points, or 0.95 percent, at 2,160.70.

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The blue-chip Dow average closed at its highest level since May 17 as investors bought industrial companies' shares such as 3M Co. (MMM) and United Technologies Corp. (UTX), anticipating that cheaper energy costs may lead to higher earnings.

The Nasdaq notched its third straight day of gains, benefiting from an upgrade of Intel Corp. (INTC) and a partnership between Internet companies eBay Inc. (EBAY) and Google Inc. (GOOG). Intel gave the Nasdaq its biggest boost.

However, trading was light on the New York Stock Exchange and the Nasdaq, with many traders taking the week off before the U.S. Labor Day holiday on Sept. 4, the unofficial end of the summer season in the United States.

Wal-Mart Stores Inc. (WMT) forecast monthly sales near the top end of its estimates, adding to optimism about consumer spending even as worries mounted about a slowdown in housing. An S&P retail index advanced 1.1 percent.

"What people were most concerned about going into the weekend was the potential for hurricanes. Since that didn't materialize, you had a sell-off in energy prices that gave a lift to the market," said Eric Kuby, chief investment officer at North Star Investment Management Co. in Chicago.

U.S. crude oil futures for October delivery dropped $1.90, or 2.6 percent, to settle at $70.61 a barrel after Tropical Storm Ernesto was forecast to miss oil rigs and platforms in the Gulf of Mexico, and was downgraded from a hurricane.

On the NYSE, about 1.16 billion shares had changed hands, well below last year's daily average of 1.61 billion. On Nasdaq, about 1.38 billion shares traded, sharply below last year's daily average of 1.80 billion.

"Thinly traded markets are choppier, and moves are going to be exacerbated," Kuby said.

Shares of industrial companies such as United Technologies and 3M rose as lower oil prices raised the prospect of lower costs and higher profits. United Technologies shares climbed 1.4 percent, or 86 cents, to $61.53, while 3M added 1.5 percent, or $1.02, to $70.94, all on the NYSE. Among the Dow's most positive influences, 3M ranked first and United Technologies was second.

"There have been persistent concerns about the higher price of oil causing inflationary pressures, and some of that should be relieved," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Traders said Wal-Mart's sales forecast helped ease worries about the retail sector, which last week took a beating as investors worried that a housing slowdown would hurt consumer spending. Wal-Mart's stock rose 1.3 percent, or 55 cents, to $44.43. It also was among the Dow's top-weighted advancers.

Oil refiner and marketer Western Refining Inc. (WNR) said Monday it has agreed to acquire Giant Industries Inc. (GI) for about $1.22 billion. Giant Industries stock surged 14.5 percent, or $10.43, to $82.22, while shares of Western Refining slipped 3.3 percent, or 85 cents, to $25.14.

Shares of eBay, the Internet auctioneer, and Google, the leading Web search company, rose after the two companies said Google will supply eBay with Web search advertising outside the United States.

The stock of eBay shot up 1.9 percent, or 49 cents, to $25.79 and Google shares advanced 2.1 percent, or $7.69, to $380.95, both on the Nasdaq.

Shares of Intel Corp. rose 2.5 percent, or 48 cents, to $19.38 after Friedman Billings Ramsey upgraded the blue-chip semiconductor maker. . In addition to helping the Nasdaq, Intel contributed the most to the S&P 500's advance.

Advancing stocks outnumbered declining ones by a ratio of more than 7 to 3 on the NYSE and by almost 9 to 5 on Nasdaq.

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