July 6, 1990

LEAD: Despite pressure from the White House and Congress to lower interest rates quickly to try to prevent a recession, the Federal Reserve apparently decided at a policy meeting this week to hold rates unchanged for the time being.

LEAD: An administrative law judge has barred one of the world's largest accounting firms from accepting any new public audit work in the New York region for 45 days. The order, naming Ernst & Whinney, which has since merged with Arthur Young to form Ernst & Young, results from defective audits that the firm is said to have performed nearly 10 years ago for the United States Surgical Corporation in Norwalk,

LEAD: Sales of domestically produced cars and light trucks jumped 12.5 percent in late June, surprising analysts and raising hopes among auto executives that the industry had turned a corner after a nine-month slump.

LEAD: There was a time when Victor H. Palmieri was flying so high he would have balked if clients tried to call the shots. Now, he'd be grateful if they would simply call.

LEAD: Parts of Long Island Sound are so polluted that it faces severe long-term environmental damage, say scientists, government officials and conservation groups.

LEAD: With health and environmental funds leading the way, mutual stock funds turned in a strong performance in the second quarter of this year. But as a group general equity funds still did not perform as well as the Standard & Poor's 500 stock index.

LEAD: President Bush and other Western leaders opened a crucial summit conference today with calls for a reshaped NATO alliance that would both reassure the Soviet Union of the West's peaceful intentions and guard against a possible revival of Soviet expansionism.

LEAD: Schools Chancellor Joseph A. Fernandez was handed his first significant setback yesterday when a state judge in Queens declared that the Chancellor may not interfere in the selection of district superintendents by New York City's 32 community school boards.

LEAD: THE group exhibition, that end-of-season ritual, is upon us, and with it comes the opportunity to take the art world's pulse. This year, these shows seem to be everywhere, uptown and down, with something to offer nearly every esthetic palate. Many of them are simply reprises of each gallery's stable of artists, but several exhibitions in S

LEAD: Friday TOWER OF FAITH

LEAD: Squeezed by Government and employer efforts to reduce costs, many hospitals are battling with specialist physicians over the revenues generated by advanced testing equipment and life-support machines. Some of the fights over these lucrative procedures are ending up in court.

LEAD: The Board of Examiners, the agency that tests New York City's teachers and other school system employees for licenses, has been blocked by the Schools Chancellor from completing a test that would have enabled some employees to become supervisors.