LEAD: Stock prices plummeted for a second day on a late wave of arbitrage-related selling and concern about the weakness of the dollar and bond prices.

DOW FALLS 36.39 IN LATE SELLING RUSH

LEAD: Mayor Koch and Correction Commissioner Richard J. Koehler yesterday ordered the random testing of 1,300 jail guards a year to combat rising drug abuse on the 8,000-member force.

Koch Orders Drug Tests For Correction Officers

LEAD: As many as 40 percent of the apartments that New York City will build or renovate as part of its housing program will be reserved for residents of nearby neighborhoods, Mayor Koch announced yesterday.

Koch Offers New Policy On Housing

LEAD: For months debates raged on the front pages of newspapers across the country. The ideas bitterly fought over included whether judges should make laws or only interpret them and the role of Congress in foreign policy.

'Inventing' U.S. Constitution: A Look Back to 1787

LEAD: Although they are wary of declaring that the unusual summer of labor unrest is over, South Korean businessmen and Government officials are certain of one thing: The strikes have slowed their export-driven economy.

South Korea's Costly Summer

LEAD: America's Roman Catholic bishops asked Pope John Paul II today to appreciate the freedom Americans prize to speak their mind, but the Pope replied that dissent was not compatible with being a good Catholic.

Dissent and 'Good Catholics' Are Incompatible, Pope Says

LEAD: The House, by a vote of 263 to 156, approved a bill aimed at protecting the domestic textile, clothing and footwear industries from import competition today. But the measure failed to win a margin big enough to override President Reagan's promised veto.

Anti-Import Bill Passed By House

LEAD: Senator Joseph R. Biden Jr., a Democratic Presidential candidate, was accused of plagiarism while in his first year at Syracuse University Law School, academic officials familiar with Mr. Biden's record said today.

Biden Was Accused of Plagiarism in Law School

LEAD: Some of the biggest guns in finance have lined up behind Representative John D. Dingell to stop legislation that would permit the nation's commercial banks to sell off their farm loans through a Government-backed secondary market.

Tough Foes for 'Farmer Mac'

LEAD: Judge Robert H. Bork backed away today from positions he has taken on key aspects of free speech and women's rights as he insisted he is not the extremist portrayed by opponents of his confirmation to the Supreme Court.

BORK BACKS AWAY FROM HIS STANCES ON RIGHTS ISSUES

LEAD: WITH its interior basketball court, enameled concrete-block walls and bright overhead lights, the new gymnasium is like that in any all-American school. But at morning choir rehearsals this week, the schoolboys who sang on the elevated stage behind one of the basketball hoops brought visions of gothic cathedrals to mind.

YOUNG VOICES SOAR AT THE NEW ST. THOMAS CHOIR SCHOOL

LEAD: In a move that could lead to significant further consolidation in banking, the Federal Reserve Board proposed today to allow commercial banks to acquire healthy savings institutions, not just those in financial trouble.

Fed May Let Banks Buy Healthy Savings Units

INSIDE

LEAD: Hailing a milestone in international cooperation to safeguard the environment, delegates from rich and poor nations approved an agreement today intended to protect the earth's fragile ozone shield.

DOZENS OF NATIONS REACH AGREEMENT TO PROTECT OZONE

LEAD: In an indictment unsealed yesterday in Manhattan, the minority leader of the New York State Senate, Manfred Ohrenstein, is charged with conspiring with two other Democratic politicians to steal hundreds of thousands of dollars from the state to finance election campaigns.

Legislator Charged in 564 Counts In New York Payroll Abuse Case

LEAD: Vice President Salvador H. Laurel broke politically with President Corazon C. Aquino today, saying his resignation as Foreign Secretary, tendered last week, was final.

No. 2 in the Philippines Quits Cabinet Position

LEAD: New York City's public schools opened this week under a cloud with an asbestos lining.

Metro Matters; Public Schools, Mismanagement And Asbestos

LEAD: In a searing report on women in the military, Pentagon advisers have accused the Navy and Marine Corps of condoning sexual harassment, discrimination and ''morally repugnant behavior'' in the Pacific region.

Sex Harassment Called Rife in Pacific Military

LEAD: Soviet-American efforts to set the stage for a summit meeting were reported to have made modest progress today as Secretary of State George P. Shultz, Foreign Minister Eduard A. Shevardnadze and their aides held long sessions on arms control, human rights and regional conflicts.

Some Gains Toward Summit Seen In the Shultz-Shevardnadze Talks

BUSINESS DIGEST: THURSDAY, SEPTEMBER 17, 1987

LEAD: In a small but important development involving the debt of a hard-pressed developing nation, Britain's Midland Bank has agreed to accept iron, copper and other raw materials from Peru as payment of part of the $160 million it owes Midland.

Peru to Pay Part of Debt In Goods

LEAD: IN terms of modern living, lofts represented a new frontier, at least for the last two decades. Their occupants, the new pioneers of downtown, loved them for their wide-open spaces.

Evolution Of the Loft: Open Space Rescaled

LEAD: About 30 chanting pharmacists clad in white jackets picketed a doctor's office here today, protesting against physicians who not only prescribe drugs, but also sell them.

Pharmacists Protest Doctors' Drug Sales

LEAD: ''THE big bucks are in advertising,'' says someone who knows, so I quit my job in publishing and get a job writing copy for half my old salary.

HERS

LEAD: Nine men, including eight present or former municipal officials in New York State, pleaded guilty yesterday to Federal fraud charges growing out of an investigation of kickback schemes.

9 Charged in New York Fraud 'Sting' Plead Guilty

Paul David Huntington is an English professional footballer who plays as a centre-back for Bradford City.

September 17, 1987

Headlines from September 17, 1987

DOW FALLS 36.39 IN LATE SELLING RUSH

Koch Orders Drug Tests For Correction Officers

Koch Offers New Policy On Housing

'Inventing' U.S. Constitution: A Look Back to 1787

South Korea's Costly Summer

Billboard 200

La Bamba

Whitney

Whitesnake

Hysteria

Bad Animals

Notable Births

Notable Deaths

Historical Context for September 17, 1987