August 19, 1983

DANCE need not take place on a proscenium stage. It can spill out into gymnasiums and the streets if necessary. That was one of the innovations of Merce Cunningham and the modern-dance experimentalists of the 1960's. This weekend, innovation will reach new levels, as dance takes to the beach and a church rooftop at opposite ends of Manhattan. Those New Yorkers who don't make it to the Hamptons or even Far Rockaway on a summer weekend know what a feast for the eyes and heat-bedraggled summer psyche ''Art on the Beach'' can be. Founded in 1978 by Creative Time Inc., the festival has become a tradition, bringing visual arts, music and dance to the sands of the Battery Park City landfill.

An article on yesterday's Washington Talk page incorrectly described the position of Nora Engel in the office of Rep. Bruce A. Morrison, Democrat of Connecticut. She is a case worker and former campaign manager.

Markets Stock prices fell sharply, eliminating most of the gains in Wednesday's upsurge, as investors cashed in some of their profits. The Dow Jones industrial average dropped 14.02 points, to 1,192.48, after having risen 16.05 points the day before. In the overall market, declines outnumbered advances by 906 to 674. Turnover fell to 82.3 million shares from 87.8 milion. (Page D1.) Prices of long-term Treasury bonds declined by about three- quarters of a point after having risen by as much as five points in the previous week. In part, the price declines were attributed to a reiteration by Henry Kaufman, the economist, that interest rates will probably rise over the next year. (D5.) Assets of money market mutual funds rose for the second consecutive week. (D6.)

The city of Houston, the dazzling and futuristic metropolis of glass, became the city of flying glass today. Hurricane Alicia roared across the Texas Gulf Coast early today near Galveston and soon found a target 45 miles inland in the very center of this fifth largest city in America. The downtown glass towers, normally so glittery in the summer sun, proved little match for the forces of nature. By the time a murky daylight appeared over the spectactular skyline, hundreds of huge panels of glass windows had dropped like cards, leaving the deserted streets of downtown Houston ankle-deep in glass and other debris.

International A Russian youth left for home by plane with his parents. Andrei V. Berezkhov, the 16-year-old son of a Soviet diplomat, told reporters at Dulles International Airport, ''I wanted to go home and not stay here.'' His departure ended a weeklong tug-of-war between Moscow and Washington that began after letters signed with his name said he hated the Soviet Union and wanted to stay in the United States. (Page A1, Columms 1-2.) The Salvadoran army, the key national institution for more than 50 years, is now the Reagan Administration's proxy in the struggle to contain lefist rebels. The chance of success depends greatly on the army's potential for change. Foreign military experts see a plausible chance that the army will win the war, but they doubt that the privileges, status and power of the officers can emerge entirely unscathed from it. (A2:3-6.)

One or more young men, using a home computer, gained access to and reprogrammed a computer containing the radiation- therapy records of patients at Memorial Sloan-Kettering Cancer Center in Manhattan, according to hospital officials and Federal documents. . The officials said that they were almost certain that none of the patients' records had been altered and that no treatment had been affected. They said, however, that they could not entirely rule out those possibilities. ''They have nothing to gain by getting into the computer, just thrills,'' said Dr. Radhe Mohan, director of the medical physics computer service at the center, which is at 1275 York Avenue, near 68th Street. Sloan-Kettering said it became aware of the tampering in June and notified the police and the Federal Bureau of Investigation. The center even left messages in the computer system begging the intruder to stop.

An article on the Vivian Beaumont Theater yesterday incorrectly described the marital status of Adele Block, vice president of the Beaumont board. She is married to Leonard N. Block, the treasurer of Lincoln Center.

Striking employees of the Consolidated Edison Company voted overwhelmingly last night to accept the terms of a new contract and end their nine-week walkout against the utility. The balloting, conducted by the Honest Ballot Association, showed 8,971 votes in favor of the agreement and 3,488 opposed. The new contract will provide wage increases of 14.5 percent compounded over the next two years, and improved fringe benefits. Patrick J. Gallagher, business manager of Local 1-2 of the Utility Workers Union, representing the 16,000 strikers, expressed satisfaction with the vote. He said shift workers would return to their jobs Sunday night and clerical employees would return Monday morning.

A gas-main break in Maspeth, Queens, forced the Long Island Rail Road to shut off power on its main line at the peak of the evening rush hour yesterday, delaying thousands of commuters. Service was restored more than two and a half hours later, shortly after 6 P.M. People in four houses near the break, at Grand Avenue and 84th Street, were removed. There was no explosion, and no injuries were reported.

Stock prices fell sharply yesterday after Wednesday's upsurge as investors cashed in some of their profits because of concern over interest rates. At the conclusion of trading, the Dow Jones industrial average was off 14.02 points, to 1,192.48. In the previous session, the widely followed barometer, which is made up of 30 blue- chip stocks, gained 16.05 points, buoyed by favorable economic news and a strong bond market. However, the overall market did considerably better than the Dow average yesterday, with stocks that fell in price on the New York Stock Exchange outnumbering those that rose by 906 to 674. Turnover on the Big Board shrank to 82.3 million shares from 87.8 million shares on Wednesday.

Victor A. Schroeder resigned today as president of the Synthetic Fuels Corporation following attacks on his performance by fellow directors and critics in Congress. He has been the corporation's second-ranking official, earning $135,000 a year, since May 1981. In his letter of resignation to the chairman, Edward E. Noble, Mr. Schroeder said ''board dissension'' involving his role as president had become apparent in recent months.

The Peanut is coming, and the home computer industry is preparing for yet another shock. The Peanut is the long-awaited entry into the home computer market by the International Business Machines Corporation. And many say that its introduction - probably by October - will be as important an event in the volatile industry as the huge, unexpected losses earlier this year at Warner Communications' Atari unit and at Texas Instruments. ''I.B.M. is about to redefine the home market for computers,'' said David Lawrence, an analyst for Montgomery Securities in San Francisco, echoing a common view. ''They won't be able to make them fast enough.''