The productivity of American workers improved in the second quarter of 1990 for the first time since the fourth quarter of 1988, climbing at an annual rate of 1.6 percent, the Labor Department said. A key gauge of inflation tied to the report jumped to 4.6 percent in the second quarter from 3.8 percent in the January-March period.

The Treasury said its quarterly refunding will proceed as scheduled this week because Congress approved legislation increasing the debt limit. An auction of 3-year notes will be held today, an auction of 10-year notes will be held tomorrow and the auction of 30-year bonds and 36-day cash management bills will be held Thursday.

Salim ''Sandy'' Lewis, the former Wall Street trader who a year ago admitted to manipulating Fireman's Fund Corp. stock prices, agreed to pay $475,000 to settle a civil lawsuit filed by the SEC.

Pepco's $1.3 billion in first mortgage bonds and $125.8 million in preferred stock were downgraded to AA- from AA by the Fitch rating service. Fitch cited the effects of limited rate increases and higher construction and financing requirements.

Alex. Brown & Sons of Baltimore has agreed to acquire between 15 percent and 20 percent of McGaw Laboratories of Irvine, Calif., a manufacturer of intravenous fluids and nutritional and pharmaceutical products, a firm that generates $225 million in annual sales. If the deal goes through, it would mark the first time in recent years that Alex. Brown has taken a significant interest in a firm outside the securities industry.

Corporate profits have declined for four consecutive quarters, according to a Wall Street Journal quarterly review. In the second quarter, net income of 639 major corporations fell 11 percent from a year earlier, while after-tax earnings on continuing operations fell 7 percent, the survey showed.