COMMENTARY

Stocks continued to show strength in shortened holiday trading. But the action

was again concentrated in the big- cap issues, with the Dow Jones industrials

hitting another record. The sharp 13-point sell-off in Computer Associates on

Dec. 27, in the wake of its announcement that revenues would fall short of

Street estimates, took the wind out of the computer group. And we may see some

selling there in the week ahead. Bonds rallied on signs that Christmas sales

fell short of expectations.

      
                                                     % change
      U.S. MARKETS                         Latest  Week    52-week
      Dow Jones Industrials                6549.4   0.4     28.0
      NASDAQ Combined Composite            1287.8   0.0     22.4
      S&P MidCap 400                        255.4   1.1     17.2
      S&P SmallCap 600                      144.6   0.8     19.4
      S&P SuperComposite 1500               162.2   0.5     21.7
      
                                                     % change
      SECTORS                              Latest   Week    52-week
      Bloomberg Information Age             233.5   1.4     21.3
      S&P Financials                         84.1   0.6     35.7
      S&P Utilities                         200.8   0.6     -0.9
      PSE Technology                        243.8  -0.9     19.7
      
                                                     % change
      FOREIGN MARKETS                      Latest  Week    52-week
      London (FT-SE 100)                   4115.7   0.6     11.6
      Frankfurt (DAX)                      2888.7   1.5     28.2
      Tokyo (NIKKEI 225)                 19,361.4   1.0     -2.6
      Hong Kong (Hang Seng)              13,480.8   1.0     33.8
      Toronto (TSE 300)                    5954.3   1.5     26.3
      Mexico City (IPC)                    3347.0   1.5     20.5
      
                                                     Week    Year
      FUNDAMENTALS                         Latest    ago      ago
      S&P 500 Dividend Yield                1.90%    1.95%    2.21%
      S&P 500 P/E Ratio (Last 12 mos.)      21.2     20.8     17.6
      S&P 500 P/E Ratio (Next 12 mos.)*     16.4     16.2     NA
      First Call Earnings Revision*        -0.06%   -0.22%    NA
      
                                                    Week
      TECHNICAL INDICATORS                 Latest    ago      Reading
      S&P 500 200-day average              679.3    677.6     Positive
      Stocks above 200-day average          65.0%    62.0%    Neutral
      Options: Put/call ratio               0.51     0.60     Negative
      Insiders: Vickers Sell/buy ratio      1.80     1.83     Positive
      
                                           Latest    Week     Year
      KEY RATES                             week%    ago%     ago%
      MONEY MARKET FUNDS                    4.95     4.94     NA
      90-DAY TREASURY BILLS                 5.14     5.02     5.10
      6-MONTH BANK CDS                      5.26     5.26     5.17
      1-YEAR TREASURY NOTES                 5.43     5.49     5.18
      10-YEAR TREASURY BONDS                6.30     6.35     5.58
      30-YEAR TREASURY BONDS                6.54     6.59     5.96
      LONG-TERM AA INDUSTRIALS              7.05     7.12     6.58
      LONG-TERM BBB INDUSTRIALS             7.51     7.58     6.96
      LONG-TERM AA TELEPHONES               7.24     7.29     6.90
      
      BEST-PERFORMING         Last                          Last 12
      GROUPS                  month%                         months%
      Defense Electronics     13.0    Oil & Gas Drillling    110.9
      Tobacco                 10.0    Shoes                   69.0
      Long-Dist. Telecomm.     8.2    Semiconductors          58.3
      Shoes                    8.1    Computer Software       50.8
      Machine Tools            6.8    Personal Loans          50.7
      
      WORST-PERFORMING        Last                           Last 12
      GROUPS                 month%                          months%
      Hardware & Tools        -9.2    Trucking               -32.2
      Manufactured Housing    -9.0    Machine Tools          -18.1
      Toys                    -8.5    Broadcasting           -17.3
      Health-Care Services    -8.0    Steel                  -11.2
      Leisure Time            -7.1    HMOs                    -8.2
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                      1-month
      significant buying on price weakness    Price          change
      IBM                                     155   1/8     -7  7/8
      Texas Instrument                         64   1/8     -1  1/2
      Apple Computer                           23   1/8     -2
      Compaq Computer                          75   1/8     -5  3/8
      Caterpillar                              76   3/4     -2  1/4
      Paccar                                   67 11/16       -1/16
      
      Decline ahead?  Stocks with most                       1-month
      significant selling on price strength   Price           change
      Microsoft                                84   1/4      5  3/8
      Intel                                   135   3/8      8  1/4
      Dell Computer                            55 15/16      3  1/2
      Worldcom                                 24   7/8      1  5/8
      Eli Lilly                                75   3/8         3/4
      Zitel                                    61   1/4     37 1/2
      
      BLOOMBERG MUNI YIELD EQUIVALENTS
      Taxable equivalent yields on AAA-rated, tax-exempt municipal bonds,
      assuming a 31% federal tax rate.
                                10-yr. bond     30-yr. bond
                               Latest  Last    Latest  Last
                               week    week    week    week
      GENERAL OBLIGATIONS      4.72%   4.78%   5.36%   5.42%
      PERCENT OF TREASURIES   74.95   75.57   81.97   82.4
      TAXABLE EQUIVALENT       6.84    6.93    7.77    7.86
      INSURED REVENUE BONDS    4.87    4.91    5.63    5.67
      PERCENT OF TREASURIES   77.34   77.63   86.10   86.28
      TAXABLE EQUIVALENT       7.06    7.12    8.16    8.22
      
      EQUITY FUNDS
      Leaders                               Laggards
      Four-week total return          %     Four-week total return%
      Cohen & Steers Realty Sh.    10.4     Matthews Korea               -12.6
      GT Global Health Care A       9.9     DFA Japanese Small Comp.     -12.3
      Delaware Pool Real Estate     9.7     Premier Strat. Growth A      -10.2
      Vanguard Spec. REIT Index     9.6     Steadman Technology Grth.     -9.1
      Van Kampen Real Estate A      9.4     Fidelity Japan Small Co.      -8.6
      
      Leaders                               Laggards
      52-week total return            %     52-week total return             %
      State St. Res. Glob. Res. A  72.6     Matthews Korea               -31.9
      Interactive Inv. Tech Val.   62.4     Steadman Technology Grth.    -30.4
      Portico MicroCap Instl.      56.6     United Svcs. Gold Shares     -26.4
      PBHG Technology & Commun.    54.3     Fidelity Japan Small Co.     -24.6
      Fidelity Sel. Energy Serv.   52.1     DFA Japanese Small Co.       -23.0
      
      EQUITY FUND OBJECTIVES
      Leaders                               Laggards
      Four-week total return          %     Four-week total return          %
      Specialty-Real Estate         7.5     Pacific                      -1.8
      Specialty-Health              2.2     Aggressive Growth            -1.8
      Specialty-Utilities           1.4     Specialty-Technology         -1.6
      Diversified Emerging Market   0.8     Specialty-Precious Metals    -1.6
      Specialty-Natural Resources   0.6     Specialty-Communication      -1.1
      
      Leaders                               Laggards
      52-week total return            %     52-week total return             %
      Specialty-Natural Resources  32.7     Pacific                        5.4
      Specialty-Real Estate        32.2     Specialty-Precious Metals      7.3
      Specialty-Financial          29.6     Specialty-Communication        7.7
      Growth and Income            23.0     Specialty-Utilities           11.4
      Europe                       22.3     Diversified Emerging Market   11.4
      
      All data are as of market close Monday, Dec. 30, 1996, unless otherwise 
      indicated. Industry groups include S&P 500 companies only.  Fundamentals, 
      technical indicators, Bloomberg money flow analysis, and mutual fund returns 
      are as of Dec. 29. For a more detailed explanation, write to us or E-mail 
      figures@businessweek.com  NA=Not available  **Vanguard Index 500 Fund
      
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