COMMENTARY

The stock market's torrid runup finally gave way as the yield on the long

Treasury bond jumped to nearly 7% before easing back. The Dow Jones industrials

shed nearly 200 points, or 2.8%, in four days even in the face of strong

earnings reports. The average equity mutual fund trails the S&P 500 so far this

year, but large-cap growth funds are beating the index. That's unusual as

small-cap stocks tend to lead January rallies. Japanese stocks, which have been

pummeled so far this year, rebounded for the week, ending with a 1.8% gain.

      
                                                    % change
      U.S. MARKETS                         Latest  Week    Year
      Dow Jones Industrials                6740.7  -1.6    27.1
      NASDAQ Combined Composite            1355.2  -2.4    30.0
      S&P MidCap 400                        261.1   -2.0    20.4
      S&P SmallCap 600                      146.3   -1.2    21.9
      S&P SuperComposite 1500               166.0   -1.8    23.3
      
                                                     % change
      SECTORS                              Latest   Week    Year
      Bloomberg Information Age             243.9   -1.7    23.7
      S&P Financials                         86.3   -1.7    37.7
      S&P Utilities                         199.2   -2.8    -1.4
      PSE Technology                        261.6   -1.4    29.4
      
                                                       % change
      FOREIGN MARKETS                      Latest   Week    Year
      London (FT-SE 100)                   4207.5   -0.3    12.7
      Frankfurt (DAX)                      2999.2   -1.0    22.6
      Tokyo (NIKKEI 225)                 18,335.3    1.8   -10.9
      Hong Kong (Hang Seng)              13,285.4   -3.0    20.1
      Toronto (TSE 300)                    6071.3    0.2    22.7
      Mexico City (IPC)                    3631.6   -2.1    17.6
      
                                                    Week    Year
      FUNDAMENTALS                          Latest   ago      ago
      S&P 500 Dividend Yield                 1.89%  1.85%   2.14%
      S&P 500 P/E Ratio (Last 12 mos.)       20.2   21.8    18.1
      S&P 500 P/E Ratio (Next 12 mos.)*      16.3   16.7      NA
      First Call Earnings Surprise*          2.11%  2.63%     NA
      
                                                    Week
      TECHNICAL INDICATORS                   Latest  ago   Reading
      S&P 500 200-day average               691.4  688.7   Positive
      Stocks above 200-day average           70.0%   2.0%  Neutral
      Options: Put/call ratio                0.58    0.48  Negative
      Insiders: Vickers Sell/buy ratio       1.81    1.89  Positive
      
                                            Latest  Week    Year
      KEY RATES                              week%   ago%    ago%
      MONEY MARKET FUNDS                     4.95    4.96    5.13
      90-DAY TREASURY BILLS                  5.17    5.18    5.17
      6-MONTH BANK CDS                       5.02    5.02    4.80
      1-YEAR TREASURY BILLS                  5.55    5.60    5.05
      10-YEAR TREASURY NOTES                 6.62    6.56    5.69
      30-YEAR TREASURY BONDS                 6.91    6.83    6.09
      LONG-TERM AA INDUSTRIALS               7.39    7.32    6.68
      LONG-TERM BBB INDUSTRIALS              7.82    7.74    7.07
      LONG-TERM AA TELEPHONES                7.61    7.52    7.04
      
      BEST-PERFORMING               Last                         Last 12
      GROUPS                       month%                         months%
      Hardware & Tools             14.4    Oil & Gas Drilling      111.2
      Semiconductors               12.6    Semiconductors           92.7
      Hotels & Motels              10.3    Shoes                    86.4
      Engineering & Constr.         9.7    Personal Loans           55.1
      Pollution Control             9.0    Computer Software        51.7
      
      WORST-PERFORMING             Last                          Last 12
      GROUPS                      month%                         months%
      Specialty Appar. Retailers  -11.0    Broadcasting            -20.6
      Specialty Retailers          -7.9    Trucking                -19.8
      Manufactured Housing         -6.3    Gold Mining             -19.2
      Department Stores            -4.7    Steel                   -12.7
      Oil Exploration & Prod.      -4.7    Restaurants              -9.3
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                   1-month
      significant buying on price weakness    Price      change
      IBM                                   150  3/4     -2 7/8
      Caterpillar                            75  3/4     -  1/4
      Bell Atlantic                          65  5/8     -1 3/8
      Ameritech                              57  1/8     -4 1/8
      Berkshire Hathaway                     33,900        -500
      Royal Dutch Petroleum                 170  1/4     -1 7/8
      Intel                                 151          17 3/4
      Microsoft                              95  5/8     12 1/8
      Cisco Systems                          68  7/8      4
      Sun Microsystems                       32  1/4      6 1/8
      Amgen                                  55  3/4        5/8
      Republic Industries                    41  1/8     12 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      4.94%   4.91%   5.54%   5.51%
      PERCENT OF TREASURIES   74.60   74.98   80.16   80.71
      TAXABLE EQUIVALENT       7.16    7.12    8.03    7.99
      INSURED REVENUE BONDS    5.06    5.04    5.79    5.76
      PERCENT OF TREASURIES   76.41   76.96   83.78   84.37
      TAXABLE EQUIVALENT       7.33    7.30    8.39    8.35
      
      EQUITY FUNDS
      Leaders                                 Laggards
      Four-week total return             %    Four-week total return        %
      Lexington Troika Russia         24.0    Capstone Nikko Japan      -10.2
      Vontobel Eastern Europ. Eq.     18.5    Dean Witter Japan         -10.2
      American Heritage               14.3    Warburg Japan OTC Comm.   -10.2
      Merrill Mid. East/Africa B      12.8    DFA Japanese Small Co.    -10.0
      Federated Emerging Mkt. A       12.2    Fidelity Japan Small Co.   -9.9
      
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return        %
      State St. Res. Glob. Res. A     79.3    United Svcs. Gold Shares   -43.4
      Interactive Inv. Tech Value     70.2    Steadman Technology Grth.  -33.6
      Portico MicroCap Instl.         69.2    Matthews Korea  -32.1
      PBHG Technology & Commun.       63.5    Fidelity Japan Small Co.   -31.0
      Warburg Small Co. Val. Com.     60.4    DFA Japanese Small Co.     -30.4
      
      EQUITY FUND CATEGORIES
      Leaders                                 Laggards
      52-week total return              %     52-week total return%
      Latin America                   7.6     Japan                    -8.0
      Diversified Emerging Markets    7.5     Precious Metals          -2.9
      Technology                      5.0     Diversified Pacific      -2.1
      Large-cap Growth                3.5     Foreign                  -0.7
      Financial                       3.3     Real Estate               0.5
      
      Leaders                                Laggards
      52-week total return              %    52-week total return         %
      Real Estate                    33.8    Japan                    -18.0
      Financial                      32.0    Precious Metals          -10.8
      Natural Resources              31.3    Diversified Pacific       -1.5
      Technology                     28.6    Pacific ex-Japan           6.4
      Small-cap Value                25.0    Foreign                    9.8
      
      All data are as of market close Wednesday, Jan. 29, 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. 28. 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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