With the perception that the economy and...

With the perception that the economy and inflation appear to be reviving, the drop in bond prices last week had a significant effect on stock prices, according to Irving Katz, director of research at San Diego Securities.

Long-term interest rates are now higher than they were in April, despite two cuts in the discount rate, totaling one point.

The price of savings and loan stocks appears to be affected by the tax reform package, which will cause a slowdown in construction of office and apartment buildings, Katz said. In addition, there is the possibility of more defaults in commercial real estate loans by investment tax shelter syndicates.

Savings and loan stocks have dropped 20% from their highs earlier this year, Katz said. Great American First Savings Bank closed at 19, down from a high this year of 24 3/4; Home Federal Savings & Loan closed at 31 3/4, down from this year’s high of 38 5/8, and Imperial Corp. of America closed at 14 7/8, down from its high of 19 3/8.

Utilities also were buffeted by rising interest rates, with SDG&E; closing at 37 1/2, down from a high last week of 42 1/2.

PSA dropped 1 to 29 3/4. During August, the stock moved from 26 to 31 on renewed takeover speculation as savvy institutional investors increased their positions, Katz said.

Intermark dropped seven-eighths to 12, despite the exchange of its U.S. Press for 25 million shares of Triton Corp., which Intermark has an option to control.

Small capitalization stocks found little support in the market and sold near their lows of the year, Katz said.

Western Health Plans closed at 5 1/8, just above its yearly low of 5. Cousins Home Furnishings closed at 3 1/8, just above its low this year of 2 7/8. And Beeba’s Creations closed near its yearly low of 13. It had hit a high this year of 27 1/2.

Energy Factors was a newcomer to the Value Line newsletter, which estimated that the company would earn $1.10 per share in 1986 and $1.40 next year on an increased number of shares outstanding.

Infrasonics was up one-sixteenth and raised $2.6 million from shareholders exercising 99% of its outstanding warrants.

Mail Boxes U.S.A. was down three-quarters to 16 3/4, despite a doubling of first-quarter earnings.

Price Co. dropped 1 1/2 to 34 3/4, down from its yearly high of 55 3/4, as new Value Line earnings estimates predicted a slowing in profit growth to 10% for the quarter just ended and earnings of $1.55 per share for the next fiscal year, Katz said.