COMMENTARY

A strong week in the U.S. equity markets. Upbeat earnings news at financial,

airline, and energy companies buoyed the market, as did continued expectations

of muted inflation. The Dow Jones industrial average rose 60 points to a record

high of 6770 on Jan. 14--its sixth gain in seven days. Traders were cheered by

word that consumer prices rose at a lower-than-expected rate. But the market

gave back some of its gains on Jan. 15, as downbeat earnings forecasts for

Intel Corp. put a damper on computer stocks.

      
                                                     % change
      U.S. MARKETS                         Latest  Week    52-week
      Dow Jones Industrials                6726.9  2.7     33.4
      NASDAQ Combined Composite            1333.5  1.0     34.9
      S&P MidCap 400                       262.0   1.5     26.0
      S&P SmallCap 600                     147.8   1.2     28.0
      S&P SuperComposite 1500              165.2   2.3     27.7
      
                                                 % change
      SECTORS                        Latest   Week    52-week
      Bloomberg Information Age       240.3   2.7     31.4
      S&P Financials                  84.7    3.3     42.2
      S&P Utilities                   202.7   1.4     0.8
      PSE Technology                  256.1   2.4     40.1
      
                                           % change
      FOREIGN MARKETS         Latest     Week    52-week
      London (FT-SE 100)      4158.9      1.7     13.5
      Frankfurt (DAX)         2988.5      2.8     26.7
      Tokyo (NIKKEI 225)      18,093.1   -3.1    -10.8
      Hong Kong (Hang Seng)   13,766.7    2.3     29.5
      Toronto (TSE 300)       6065.3      2.3     28.0
      Mexico City (IPC)       3728.0      4.8     28.2
      
                                                     Week    Year
      FUNDAMENTALS                         Latest    ago      ago
      S&P 500 Dividend Yield               1.88%     1.92%    2.27%
      S&P 500 P/E Ratio (Last 12 mos.)     21.6      21.2     17.1
      S&P 500 P/E Ratio (Next 12 mos.)*    16.5      16.1     NA
      First Call Earnings Surprise*        4.59%     1.92%    NA
      
                                                  Week
      TECHNICAL INDICATORS              Latest     ago     Reading
      S&P 500 200-day average           685.5     682.2    Positive
      Stocks above 200-day average      72.0%     69.0%    Negative
      Options: Put/call ratio           0.51      0.52     Negative
      Insiders: Vickers Sell/buy ratio  1.85      1.85     Positive
      
      BEST-PERFORMING         Last                             Last 12
      GROUPS                  month%                            months%
      Oil & Gas Drilling      23.5    Gold Mining                -8.3
      Oil-Well Equip. & Svces.16.0    Toys                       -5.4
      Soft Drinks             14.2    Specialty Appar. Retailers -5.3
      Shoes                   14.0    Specialty Retailers        -4.6
      Hardware & Tools        12.1    Manufactured Housing       -4.3
      
      WORST-PERFORMING        Last                           Last 12
      GROUPS                 month%                          months%
      Oil & Gas Drilling      162.7   Trucking                -24.9
      Semiconductors          95.7    Broadcasting            -21.7
      Shoes                   78.7    Gold Mining             -17.1
      Personal Loans          64.4    Machine Tools           -12.4
      Oil-Well Equip. & Svces.62.5    Steel                   -7.6
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                   1-month
      significant buying on price weakness    Price      change
      Micron Technology                       33         -1 3/4
      Novell                                  9 7/8      -1/8
      Time Warner                             37 3/4     -1/2
      PacifiCare Health Systems               74         -9
      Adobe Systems                           38 3/4     -1/4
      Ross Stores                             45 5/8     -3 11/16
      
      Decline ahead?  Stocks with most                   1-month
      significant selling on price strength   Price      change
      Intel                                   147 1/8     19 7/8
      Microsoft                               85 3/8      8 5/8
      Oracle                                  43 1/4      11/16
      Cisco Systems                           72 1/8      8 3/4
      Worldcom                                26 7/8      3 1/8
      Dell Computer                           65 3/8      11
      
                                           Latest    Week     Year
      KEY RATES                             week%    ago%     ago%
      MONEY MARKET FUNDS                    4.95     4.98     5.17
      90-DAY TREASURY BILLS                 5.13     5.16     5.14
      6-MONTH BANK CDS                      5.01     5.01     4.91
      1-YEAR TREASURY BILLS                 5.55     5.61     5.06
      10-YEAR TREASURY NOTES                6.52     6.60     5.66
      30-YEAR TREASURY BONDS                6.79     6.83     6.09
      LONG-TERM AA INDUSTRIALS              7.28     7.33     6.67
      LONG-TERM BBB INDUSTRIALS             7.70     7.80     7.10
      LONG-TERM AA TELEPHONES               7.49     7.54     7.02
      
      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     4.89%   4.85%   5.53%   5.49%
      PERCENT OF TREASURIES   75.05   73.62   81.46   80.24
      TAXABLE EQUIVALENT      7.09    7.03    8.01    7.96
      INSURED REVENUE BONDS   5.01    4.98    5.77    5.74
      PERCENT OF TREASURIES   76.89   75.59   84.99   83.89
      TAXABLE EQUIVALENT      7.26    7.22    8.36    8.32
      
      EQUITY FUNDS
      Leaders                                Laggards
      Four-week total return            %    Four-week total return      %
      Vontobel Eastern Europ. Eq.     18.9   DFA Japanese Small Co.    -13.5
      Pioneer India A                 15.6   Capstone Nikko Japan      -10.4
      Morgan Stanley Em. Mkts. B      15.5   Fidelity Japan Small Co.  -10.0
      Lexington Troika Russia         15.2   Dean Witter Japan         -9.5
      American Heritage               14.8   Franklin Templeton Japan  -9.3
      
      Leaders                                Laggards
      52-week total return              %    52-week total return        %
      State St. Res. Glob. Res. A     84.7   United Svcs. Gold Shares  -37.9
      Interactive Inv. Tech Value     82.0   Fidelity Japan Small Co.  -28.3
      PBHG Technology & Commun.       77.1   Matthews Korea            -28.3
      Portico MicroCap Instl.         74.3   DFA Japanese Small Co.    -28.3
      Fidelity Sel. Energy Serv.      63.5   Lexington Strat. Invmnts. -27.1
      
      EQUITY FUND OBJECTIVES
      Leaders                                 Laggards
      Four-week total return           %      Four-week total return     %
      Diversified Emerging Market     9.6     Specialty-Precious Metals -3.0
      Specialty-Natural Resources     7.6     Pacific                    0.9
      Specialty-Technology            7.4     Multiasset Global          2.4
      Specialty-Real Estate           6.7     Balanced                   3.2
      Maximum Growth                  6.3     Asset Allocation           3.3
      
      Leaders                                 Laggards
      52-week total return              %     52-week total return        %
      Specialty-Natural Resources     36.5    Specialty-Precious Metals -7.6
      Specialty-Technology            36.2    Pacific                    1.5
      Specialty-Real Estate           35.0    Foreign                   11.8
      Specialty-Financial             34.2    Diversified Emerging      12.6
                                              Market
      Growth and Income               27.5    Specialty-Utilities       12.7
      
      All data are as of market close Wednesday, Jan. 15, 1997, 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 Jan. 14. 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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