April 5, 1994

Two drugstore chain giants, Revco D.S. Inc. and Hook-Superx Inc. signed a definitive merger agreement yesterday that would create the nation's second-largest drug chain in terms of total sales and stores. Revco agreed to pay $600 million cash for Hook-Superx, or $13.75 a share. The price includes $300 million of Hook debt that Revco will assume.

U.S. Judge Is Skeptical Of Military Gay Policy In a decision that could signal trouble for the new military policy on homosexuals, a Federal judge blocked the Pentagon from discharging six gay service members. The judge expressed skepticism that the new rules safeguard homosexuals in ways the old policy did not. Page A14. A New Barrier in Hebron The Israeli Army has put up a 100-yard-long security wall near Jewish settlements in Hebron, but Jews see it as building a ghetto and Palestinians as partitioning an Arab city. Page A3. Fossil Trove in the Gobi Fossil hunters have found a rich array of new bones near where their gasoline truck got stuck in the Gobi Desert. Science Times, page C1. Youth Killed in the Subway A 16-year-old student was shot and killed on a Brooklyn subway platform after an argument with other youths, the police said. Page B1.

The software company Novell Inc. is expected to announce on Tuesday that it is naming Robert Frankenberg, a Hewlett-Packard executive, president and chief operating officer. People familiar with the plans said that Raymond J. Noorda would continue for an indefinite time as chief executive but that Mr. Frankenberg had been hired with the understanding that he would eventually succeed him. Mr. Noorda has said he will retire before his 70th birthday in June. He is expected to continue beyond then as chairman.

The stock and bond markets continued to be jolted yesterday by intense selling. Stocks plunged at the market's opening, and the Dow Jones industrial average ended the day down 42.61 points. Bonds continued Friday's steep decline, with the yield on the 30-year Treasury bond surging to 7.41 percent Investors are becoming increasingly nervous about the unstable markets. Although there appeared to be no panic redemptions at mutual funds, individual investors showed little interst in buying, in contrast to previous recent market downturns. And they have good reason to be nervous: Some big institutional investors have suffered heavy losses.

President Clinton's plan to overhaul the welfare system could cost much more in the long run than previously disclosed, possibly adding $58 billion to the nation's welfare costs over 10 years, according to a confidential memorandum presented to Mr. Clinton. The document also says Mr. Clinton should understand that "in rare circumstances" his plan to enforce a two-year limit on welfare benefits could leave families "homeless or unable to care for their children."