March 18, 1986

Stock prices fell sharply yesterday on Wall Street as investors, already fat with profits from last week's record gains, decided to trim their portfolios. ''People were still talking about last week, no one really wanted to become active today,'' said Laszlo Birinyi, manager of equity market analysis at Salomon Brothers. ''I think there was a little bit of profit taking and a little bit of uneasiness.'' The Dow Jones industrial average, coming off its 92.91-point rise last week, lost 15.92 points yesterday, to 1,776.82. The blue-chip average had not dropped this much in a single session since Feb. 19, when it fell 20.52 points.

Since early last month, New York City's Board of Estimate has ruled on 40 percent fewer matters than it did during the same period last year. The City Council's new majority leader says he cannot find people willing to work for him. The political leaderships of Queens and the Bronx, embroiled in a multiplicity of investigations, are, by the account of many officeholders, not exerting their usual influence on appointments and favored projects. James F. Capalino, a former City Commissioner of General Services, says city government has been subjected to ''the paralysis factor.'' It has been just over two months since a Federal investigation in Chicago set off a novelistic chain of events in New York that reached its grimmest point last Thursday night with the suicide of Donald R. Manes, the scandal-tarred former Queens Borough President whose apparent suicide attempt in January helped propel allegations of municipal corruption into the spotlight.

THE human vertebrae in Dr. Donald J. Ortner's hand looked as if they had been corroded by acid. Only fragments remained of several of the key bones near the base of the spine. ''This was an Eskimo man in his early 20's,'' Dr. Ortner told a visitor. ''He probably died less than 100 years ago, and it was tuberculosis that mutilated the bones of his spine. This young man was probably at least partly paralyzed and in great pain during his final months, but it wasn't the disease that killed him.'' From the drawer containing the victim's other bones Dr. Ortner withdrew the skull, which was pierced by two small holes. A bullet had entered the back of the victim's head and emerged near the temple. Had the man been slain as an act of mercy? ''It certainly looks that way,'' Dr. Ortner said.

American industry operated at just 80 percent of capacity in February, the second consecutive month that the operating rate at the nation's factories, mines and utilities has declined, the Government reported today. The Federal Reserve Board said the operating rate fell a steep six-tenths of a percentage point last month, the biggest decline since a seven-tenths of a percentage point drop last October. The operating rate had dipped by one-tenth of a percentage point in January, the Government said. This originally had been reported as a one-tenth of a percentage point increase.

The Soviet Union has started preparations for the possible resumption of nuclear weapons testing, Reagan Administration officials said today. Satellite reconnaissance photographs show the Soviet Union has been digging holes and tunnels in which nuclear explosives can be placed and moving monitoring equipment into a test area, according to officials who have seen secret intelligence reports. The Soviet Union announced last July 30, a few days after conducting a nuclear test, that it was halting its testing program and urged the United States to join in. The United States refused on the ground that it had to catch up with Soviet weapons development.