NEW YORK, JULY 12 -- The Dow Jones industrial average surged 37 points to close at a record high today as the prospect of lower interest rates, higher oil prices and rebounding retail sales combined to give investors and money managers the excuse they've been looking for to move back into the stock market.

The rally began in earnest at noon after Federal Reserve Chairman Alan Greenspan said the Fed might lower short-term interest rates to compensate for overly tight lending policies of the nation's banks. Momentum picked up when a fresh surge in crude-oil futures created spectacular gains in oil shares. Traders were also encouraged by some better-than-expected June sales figures from some of the nation's largest department and specialty stores.

Takeover speculation in Contel Corp. and a big special dividend announced by Curtiss-Wright, among other factors, added spice to the trading, while the latest earnings-related disaster, in Computer Associates, failed to undermine the broader market.

At the close, the Dow stood at 2969.80, up 37.13, besting its June 15 record high by almost 34 points. Advances outpaced declines on the Big Board by almost 2 to 1. New York Stock Exchange volume was heavy at 211 million shares, the fourth-most-active session of the year.

News of the GTE-Contel merger buoyed other independent phone company stocks. Centel added 2 1/8 to 36 3/4, Southern New England Telecommunications added 2 1/4 to 35 3/8, Rochester Telephone jumped 3 to 34 3/4 and Metro Mobile tacked on 1 3/8 before closing at 18 1/2.

Among industry groups, the big oil companies provided strong leadership as crude-oil futures surged over $1 per barrel amid a frenzy of short-covering on talk of Saudi Arabian concessions to OPEC to limit global production.

Among the oil shares, Atlantic Richfield surged 4 3/8 to 122, while 2-point gains were widespread in companies like Amerada-Hess, Amoco, British Petroleum, Pennzoil, Royal Dutch and Unocal, as well as in Dow components Chevron and Texaco.

Oil field service issues jumped even more sharply. Schlumberger rose 2 5/8 to 60 1/4, Dresser Industries added 2 to close at 51 and Halliburton gained 1 1/2, ending the day at 49 1/4.

Another announcement that underpinned bullish market sentiment came from aerospace outfit Curtiss-Wright, which declared a special, one-time dividend of $30 per share. Curtiss-Wright shares surged 5 3/4 to 69 for a 9 percent advance.

Retail-store sales were generally a supportive factor as well, although price action varied in response to the latest sales numbers. Gap Stores advanced sharply, up 3 1/2 at 63 1/2, after announcing a 24 percent surge in comparable-store sales over year-ago results. But The Limited slid 2 1/8 to 23 after reporting sales up a disappointing 5 percent for the five-week period ended July 7.

Another positive factor was the relative isolation in which the market's latest earnings-related disaster was kept. Computer Associates fell into one of the market's recurrent "black holes" following a simple announcement this morning that revenue for its first fiscal quarter was running under estimates. The stock closed down 6 1/4 at 10 1/4, a 38 percent free fall.

Among broad stock indexes, the Standard & Poor's 500 was up 4.21 at 365.44, the NYSE Composite up 2.21 at 199.32, the Value Line up 2.08 at 289.14, the Amex Market Value up 2.82 at 362.23 and the Nasdaq Composite up 3.27 at 467.17.