September 15, 1986

What is going on in the stock market? Across the country, millions of Americans are asking that question, trying to puzzle out why the stock market suffered one of its worst declines ever - a two-day plunge on Thursday and Friday of nearly 121 points in the Dow Jones industrial average - and where it will go from here. The New York Times asked a number of financial and economic experts how they explain what happened and where they believe stocks are heading. Their responses follow. George L. Ball, chairman and chief executive officer of Prudential-Bache Securities Inc.: The decline is more than technical. About a month ago, we had put up a bright amber light, saying the economy was not doing well and that stocks therefore were expensive. Corporate earnings are not strong. Inflation is fine and employment levels are relatively good, but earnings are weak. That is not the stuff on which sustained market rallies are based.

After a year in which discussions of interest rates focused on how fast they would decline, the bond markets are in turmoil, as some analysts suggest that the downward trend is finished and the next move is toward higher rates. The debate is far from settled, but last week's sharp decline in bond prices was a clear sign that the fear of higher interest rates is growing. By late Friday, the bellwether 7 1/4 percent Treasury bonds were offered at 95 3/32 to yield 7.68 percent, down from 100 21/32 to yield 7.20 percent as recently as two weeks ago. Securities dealers agreed that in the last several days there has been increased selling by institutional investors, including some of the ''big names'' whose judgments are widely respected. If others of the 3,500 or so major institutional investors in the country decide to join the ranks of the sellers, traders said, it would be hard to imagine that bond prices could do anything but decline.

Texas Commerce Bancshares, one of the largest banks in Texas, has put itself up for sale, and several large banks in New York and California have begun sifting through its books to determine what price, if any, they should offer, banking sources said yesterday. Among the prospective buyers are the Chase Manhattan Corporation and the Chemical New York Corporation, both of New York, and the Security Pacific Corporation and the First Interstate Bancorporation, both of Los Angeles, according to the sources, who said that discussions were in an early stage and a sale was not likely soon. None of the potential acquirers would confirm the reports publicly. In Houston, Bruce LaBoon, vice chairman and general counsel of Texas Commerce, declined to comment on the reports, but did not deny them.

West Germany and Japan are soon likely to heed the Administration's ongoing appeals to cut their interest rates, one of President Reagan's senior economic policy officials said today. But the official, who asked not to be identified, and others said they saw little else that Washington could do to tame the volatility in the financial markets of the sort that occurred on Thursday and Friday, and saw little reason as yet to try. Japan and West Germany are the two largest economies after the United States and reductions in their rates help their economies grow just as they do in the United States. With lower rates, their consumers and businesses can borrow to buy more cars, homes and machinery, giving their economies a boost. Growth Spillover Seen The Administration maintains that faster growth in those countries would spill over into the United States with rising demand for the goods that American companies export, enhancing their profits and the appeal of their stocks to investors.

Prodded in part by rising concern over drug use and teen-age pregnancy, public schools around the country are paying increased attention to the teaching of personal and social values. At New Rochelle High School, outside New York City, for example, students watch a film about a teen-ager who befriends a bag lady in Central Park, the basis for a social studies discussion. ''We are trying to evoke feelings that we are responsible for each other,'' Linda E. Kelly, the assistant superintendent, says of these lessons on ''caring.'' In Maryland, each school in Baltimore County must have a committee draw up a ''common core of values'' and design ways of teaching them. Projects have ranged from a study of academic honesty to student production of original operas based on fairy tales with a moral dimension, like ''The Little Red Hen'' with its theme of helping one's neighbor.