The New York Stock Exchange came almost all the way back yesterday, after a black Monday that saw the largest drop in prices since 1929. The Dow-Jones average of 30 industrial stocks rose 27.03 points, to 603.96, regaining most of the 34.95 points lost the day before.

"Blue-chip" stocks, which had taken a heavy beating, led the rally that began shortly after noon yesterday. As buyers took over the market from sellers, 14.75 million shares changed hands. (On Monday, 9.35 million shares were sold.)

Shares lost $19.5 billion in paper value in Monday's action, as the market had its worst day since Oct. 28, 1929. The decline continued yesterday morning, but by the end of the day, $12.9 billion had been recovered.

Yesterday afternoon, before the extent of the recovery was known, Otto Eckstein, associate professor of Economics, gave what he called "the standard list" of reasons for Monday's decline:

1. The end of Inflation psychology. Buyers had gone into the market in expectation of continued inflation, but recent events, capped by President Kennedy's intervention in the steel price hike, destroyed this prospect.

2. Concern about governmental attitudes. The investigation of the Securities and Exchange Commission caused unrest in the business community. And there has been widespread concern about antitrust action, although, Eckstein said. "Kennedy has probably done less on this than Eisenhower."

3. The profit squeeze. The economy's recovery has not been as rapid as predicted, and expected earnings have been revised downward.

4. Speculative excesses. Expectations of higher profits, even though they did not materialize, kept the price of stocks on the rise. Eventually, disillusionment set in: "the highest stocks took the biggest drop." Eckstein pointed out.

5. Holding back on the part of major institutions. Pension funds, mutual funds, and trusts, usually counted on to stabilize the market, have taken cash positions instead. They have held back from buying any stocks, and in some cases have been selling out.

7. Credit. "More credit has been used than the margin requirement (70 percent) leads you to believe," Eckstein said. Buyers can get additional credit from banks, for example.

8. Possible flight of European money. European money may be more susceptible to being withdrawn, since there is less expectation of growth overseas. Some European exchanges, especially in Germany, declined before American markets fell.

Seymour E. Harris, Lucius N. Littauer Professor of Political Economy, said the Administration could do little in the present situation except reassure the country that the economy is basically healthy.

But Jesse W. Markham, visiting professor of Economics, said "the government has to do something other than exhort or urge." The Administration should clarify its attitude toward private business, he said. "A certain unsettled feeling in the business community could be settled by a clear-cut statement that the Administration has no plans for re-organizing the structure of industry."

Markham said, however, that the government should not try to stabilize the stock market by direct methods.

James S. Duesenberry, professor of Economics, thought the Administrative "may have to take positive action" to offset the decline in investment. For instance, he said, Congress could be "more enthusiastic" about the investment credits contained in the current tax bill