November 14, 1996

Federal Reserve votes to keep interest rates unchanged, as Government report on producer prices provides latest evidence that inflation remains quiescent despite surge last month in food and energy costs; Labor Dept's Producer Price Index shows prices at producer level fell by three-tenths of 1 percent last month when food and energy were excluded; decline in core component is steepest in two years; index including food and energy rose four-tenths of 1 percent, biggest increase since March; economists say continuing lack of evidence of inflationary threat suggests Fed will keep rates unchanged at its last policy-making meeting of year, on Dec 17, and perhaps well into next year; graph (M)

Gov George E Pataki releases details of sweeping welfare plan, that includes new restrictions, while denying accusations that he is trying to balance New York State's budget on backs of poor; plan would revamp 60 years of state social service law by gradually cutting and ending family benefits over five years, ending cash grants to many legal immigrants and able-bodied adults and giving local governments broad authority to set benefit levels; would also impose penalties on welfare recipients who use drugs, violate parole, have truant children or fail to participate in work programs; would increase spending on job training and day care by $130 million in fiscal '98, and create $150 million contingency fund to expand such services in future years; Pataki insists primary goal is not to reduce state or local spending, vowing to reinvest all savings on programs intended to put welfare recipients to work; array of Democratic officials and advocates for poor say Pataki's plan is filled with harsh measures that seem intended solely to save state money (M)

Patricia Leigh Brown article on her 1950's girlhood home in Highland Park, Ill, which is being torn down to make room for huge house being built by new owners; such tear-downs are increasingly common in neighborhood where affluent empty-nest couples are erecting pleasure domes on large lots that formerly accommodated young families with smaller houses; photos (M)

Princeton Borough and Township officials agree to oppose $45 million project designed to alleviate traffic congestion along Route 1 (New Jersey Daily Briefing) (S)

Westinghouse to Spin Off Industrial Businesses After months of prodding from Wall Street, Westinghouse said that it would spin off its remaining industrial businesses to shareholders and focus on its radio and television operations. But investors, who had bid up the price of Westinghouse shares by about 20 percent over the course of the last week on reports that a sweeping reorganization was in the offing, chose to sell on the news. Market Place. $(D8.$) Stocks Rise on Fed Inaction Stocks rose after the Federal Reserve left interest rates unchanged and investors looked to corporate earnings for their cues. The Dow Jones industrial average rose 8.20 points, to 6,274.24, its sixth consecutive record close, on higher than average volume. $(Page D8.$) But retail stocks endured a second day of pounding, with some companies paying for the weak earnings of their peers. Dillard Department Stores announced disappointing earnings and Federated Department Stores had healthy profits, yet both stocks fell. The Standard & Poor's retail index fell 1.7 percent, to 382.75. $(D3.$) Bond traders were relieved by the Fed's decision, but prices barely budged. The yield on the 30-year Treasury bond rose to 6.45 percent from 6.44. $(D15.$) Stock Funds Draw Less Cash Cash flows into equity mutual funds fell by 25 percent in October, to $13 billion, a trade group said, as uncertainty over the strength of the economy and over the outcome of the November elections tempered investors' long-running love affair with stocks. $(D24.$) Another British-U.S. Utility Deal Dominion Resources, continuing an American invasion of the British utility industry, agreed to acquire East Midlands Electricity for about $2.15 billion. $(D4.$) Drug Helps Prevent Heart Attacks A study has found that a blood thinner called clopidogrel is more effective than aspirin in warding off heart attacks and strokes in people who have clogged arteries. Clopidogrel is being jointly developed by Sanofi and Bristol-Myers Squibb. $(A18.$) Tougher Nasdaq Standard Proposed The Nasdaq stock market, after being embarrassed by scandals that involved penny stocks, is proposing stricter listing standards that it said could cause hundreds of companies to be dropped from its listings. $(D2.$) I.B.M. in Educational Software Deal I.B.M. took its first big step toward becoming a major seller of educational software to schools and homes, saying it would buy Edmark for about $110 million. $(D3.$) Pepsi Returning To Venezuela Pepsi is coming back to Venezuela, five months after its bottler and distributor switched to Coke. Pepsico formed a venture with a brewer to bottle and distribute Pepsi, which had been the dominant soft drink in Venezuela before Coke's coup. $(D5.$) Growth, Not Inflation, Is Up in China China's chief banker said that the Government had achieved what few economists thought it could: high growth and low inflation. $(D4.$) Limit on Workweek Is Rejected Prime Minister John Major has plunged Britain into another clash with its 14 European Union partners by rejecting a court ruling that mandates a maximum workweek of 48 hours, including overtime. $(A7.$)