January 4, 1991

With the economy slumping and the deadline for Iraq to get out of Kuwait keeping investors on edge, the stock market headed sharply lower yesterday for the second consecutive day. Drug stocks, usually unaffected by hard times, fell sharply after Merrill Lynch said investors were holding too many drug shares.

Struggling to reverse what has become a very serious decline, Sears, Roebuck & Company said today that it would eliminate 21,000 jobs at its stores nationwide. That represents slightly more than 10 percent of the jobs in Sears stores. The positions being eliminated will range from those for stockroom clerks to accounting personnel and loading-dock crews. but will not include sales personnel. The reductions will involve 3,500 full-time positions and 17,500 part-time slots.

Lawmakers used the first day of the 102d Congress to introduce a flurry of legislation today to overhaul the Federal program that protects bank deposits and to change the framework of financial regulation. The moves are the first step in what promises to be months of debate over how to reorganize the banking industry. Later this month the Bush Administration is expected to announce what it has billed as a comprehensive package of proposals aimed at shoring up the bank insurance fund and rolling back decades-old laws that restrict interstate banking and prevent the merger of commercial banks with investment banks.

Pan American World Airways announced yesterday that it was suspending flights to Tel Aviv and to Riyadh, Saudi Arabia, because of surging insurance rates, a result of the crisis in the Middle East. In addition, KLM Royal Dutch Airlines canceled its flights to Amman, Jordan, and other carriers are evaluating whether to continue serving Middle Eastern destinations. Travel agents said bookings to the area had dropped sharply and suggested that could be an important factor in the airlines' decisions.

America's largest public relations firms grew up believing that their job was to influence mass audiences by placing stories about their clients in newspapers and magazines and on television. Now, they know they need relations with different kinds of publics, chief among them Government regulators, the legislators to whom they answer and the voters who put the legislators in office. So public relations agencies that once looked with disdain on the button-holers and influence peddlers of Capitol Hill have been snapping up Washington's most politically connected lobbying firms.