COMMENTARY

Angst in the U.S. stock market continued, with small-cap stocks feeling special pain as investors fretted about earnings. The Nasdaq composite index fell a jolting 3% on July 23, declining to its lowest level in six months. Blue-chips were not spared, with the Dow Jones industrial average falling almost 120 points in three days of trading, from 5464 on July 18 to 5346 on July 23. But the Dow staged a small 8-point recovery on July 24--after declining 76 points during the day--while broader indices kept falling.

MARKET ANALYSIS

                                                          % change
      U.S. STOCKS                                Latest      Week      52-week
      DOW JONES INDUSTRIALS                     5354.7       -0.4       13.8
      MIDSIZE COMPANIES (S&P MidCap Index)       214.3       -2.7       4.5
      SMALL COMPANIES (Russell 2000)             307.8       -3.3       3.9
      ALL COMPANIES (Russell 3000)               353.9       -1.6       10.2
      FUNDAMENTALS                               Latest    Week Ago    Year Ago
      90-DAY TREASURY BILL YIELD                 5.30%       5.26%       5.61%
      30-YEAR TREASURY BOND YIELD                7.04%       7.03%       6.88%
      S&P 500 DIVIDEND YIELD                     2.29%       2.26%       2.38%
      S&P 500 PRICE/EARNINGS RATIO               18.0        18.7        16.6
                                                    % change (local currency)
      FOREIGN STOCKS                        Latest      Week      52-week
      LONDON (FINANCIAL TIMES 100)         3668.8       0.3         6.2
      TOKYO (NIKKEI INDEX)               20,631.0      -3.7        25.9
      TORONTO (TSE COMPOSITE)              4880.3      -1.2         6.0
      TECHNICAL INDICATORS                         Latest   Week ago   Reading
      S&P 500 200-day moving average                633.7    632.4r    Negative
      Stocks above 200-day moving average            40.0%    43.0%r   Positive
      Speculative sentiment: Put/call ratio          0.69     0.89     Neutral
      Insider sentiment: Vickers sell/buy ratio      2.21     2.26     Neutral
      DATA: BLOOMBERG FINANCIAL MARKETS
      
      INDUSTRY GROUPS
                             % change                         % change
                            1-    12-  Strongest stock       1-    12-
      ONE-MONTH LEADERS   month month    in group            month month  Price
      1.OIL AND GAS
       DRILLING            8.6  67.7      ROWAN              10.5  117.2  5 3/4
      2.OIL EXPLORATION                   BURLINGTON
       AND PRODUCTION      6.7  16.6       RESOURCES          9.5   18.5 44 3/4
      3.COSMETICS          2.4  31.6       GILLETTE           8.3   48.7 63 3/4
      4.MONEY CENTER
       BANKS               1.1  32.6      BANKAMERICA         6.7   44.8 78
      5.NATURAL GAS        0.6  28.1      COLUMBIA GAS
                                           SYSTEM            10.6   52.6 52 1/4
                             % change                         % change
                           1-    12-     Weakest stock       1-     12-
      ONE-MONTH LAGGARDS   month month   in group           month  month Price
      1.TRUCKING          -27.3  -37.0   CALIBER SYSTEM    -43.4  -53.3  19 3/4
      2.MACHINE TOOLS     -24.5  -34.9   GIDDINGS & LEWIS  -35.5  -30.5  11 1/8
      3.LONG-DISTANCE
       TELECOMMUNICATIONS -17.7   -0.8   AT&T              -20.1   -6.3  50 1/4
      4.BROADCASTING      -17.2  -16.0   TELE-
                                          COMMUNICATIONS   -23.5  -20.7  14 1/4
      5.HMOs              -17.1    5.8   UNITED HEALTHCARE -31.3  -23.4  33 1/2
      
      MUTUAL FUNDS
      LEADERS                            LAGGARDS
      Four-week total return    %        Four-week total return          %
      1.FIDELITY SELECT                   FIDELITY SELECT
       NATURAL GAS             6.4        AIR TRANSPORTATION          -19.0
      2.INVESCO STRATEGIC
       ENERGY                  4.1       PREMIER STRATEGIC GROWTH     -14.2
      3.EXCELSIOR LONG-TERM              RESERVE INFORMED
       SUPPLY OF ENERGY        4.0        INVESTORS GROWTH A          -12.9
      52-week total return     %         52-week total return           %
      1.LANDMARK SMALL
       CAP EQUITY A           77.3       STEADMAN TECHNOLOGY GROWTH  -31.8
      2.TURNER SMALL
       CAP EQUITY             49.9       STEADMAN AMERICAN INDUSTRY  -24.7
      3.FREMONT U.S.                     SELIGMAN COMMUNICATIONS
       MICRO-CAP              48.1        & INFORM. D                -21.5
      MORNINGSTAR INC.
      
      RELATIVE PORTFOLIOS
      Dollar amounts represent the present value of $10,000 invested one year ago in each portfolio
      Percentages indicate five-day total returns
       U.S. stocks  Foreign stocks  Money market fund   Gold   Treasury bonds
         $11,414       $10,838           $10,529      $10,479     $10,231
          -0.24%        +0.29%            +0.11%       +0.68%      +0.39%
      DRI/McGRAW-HILL
      All data on this page are as of market close Wednesday, July 24, 1996, unless
      otherwise indicated. Industry groups include S&P 500 companies only; performance
      and share prices are as of market close July 23. Mutual fund returns are
      as of July 19. Relative portfolios are valued as of July 23. A more detailed
      explanation of this page is available on request. r=revised
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