Wall Street traders, including institutional investors in large numbers, concentrated their attention yesterday on defense, oil and precious metals issues -- as well as on Marriott Corp. of Washington.

As overall volume soared to the seventh highest level in New York Stock Exchange history, broad market indicators posted continued gains and the Dow Jones average of 30 industrial blue chips on the NYSE closed up 2.39 to 879.94 -- the highest close since 884.04 last Oct. 8.

Marriott was the most active Big Board issue with 841,900 shares changing hands in nationwide stock market trading. The company's stock closed up 25 cents for the day at $22 a share -- precisely the price being offered by the company in a surprise decision to buy back up to 11 million shares of its common stock.

The hotel, restaurant and airline catering firm said Wednesday that it soon will send a circular to stockholders, offering to buy at least 5 million shares at $22 apiece. In addition -- depending on the outcome of current negotiations to sell some hotel properties -- Marriott said it could decide to buy up to 11 million shares, about a third of the 32.1 million shares now in the public's hands.

Marriott executives said their lawyers had told them not to discuss reasons for the stock-purchase decision or the names of hotel properties involved, until the circular is ready within 10 days. The heavy trading in Marriot stock yesterday included huge blocks of 143,000, 135,300 and 100,000 -- all at $22 a share.

American Stock Exchange issues also were active yesterday as the Amex index rose 2.6 to 266.60 -- its 11th consecutive record high in the past year. Flow General, a Northern Virginia firm, was down $1.75 a share to $34.75 after announcing plans to sell 400,000 common shares.

Over-the-counter stocks, as measured by the National Association of Securities Dealers NASDAQ composite index, rose 0.74 to a new 1979-1980 high of 159.24.

At the NYSE, advancing issues led decliners by 869-676 after being ahead as much as 3-1 earlier in the day. With close to 1,000 large blocks included, Big Board volume was 59.5 million compared with 50.7 million the previous day. Nationwide composite volume rose to 64.87 million shares from 55.78 million the previous session.

The NYSE index rose .19 to 65.32 with the price of an average share up 10 cents, while the Standard & Poor's index of 500 stocks rose .26 to 113.70. 1

Pointing out the large block trades in Marriott and other issues, James Meyer, vice president of Janney Montgomery Scott Inc., of Philadelphia, said there has been "panic buying" in some popular groups as cash-rich institutions move back into the stock market.