STOCKS

COMMENTARY

A topsy-turvy week in the financial markets, in which U.S. stocks seesawed as

economic tidings shifted. After dipping below 7000 on May 1, the Dow Jones

industrial average climbed 95 points to 7071 on May 2, spurred by upbeat

earnings news in the computer sector. The rally continued on May 5, when the

Dow rose 143 points amid expectations for low inflation. But after climbing to

a record 7225 on May 6, a shift toward downbeat inflation sentiment sent the

Dow falling 140 points on May 7.

 
      
                                                    % change
      U.S. MARKETS                    Latest  Week    Year
      Dow Jones Industrials           7085.7  1.1     30.7
      NASDAQ Combined Composite       1322.9  4.9     11.9
      S&P MidCap 400                  266.2   3.5     14.2
      S&P SmallCap 600                146.1   5.4     9.0
      S&P SuperComposite 1500         174.3   2.1     25.5
      
                                                     % change
      SECTORS                         Latest  Week    Year
      Bloomberg Information Age       249.9   2.2     21.7
      S&P Financials                  91.7    0.9     46.0
      S&P Utilities                   192.7   3.5     2.7
      PSE Technology                  267.3   6.8     21.5
      
                                                         % change
      FOREIGN MARKETS                 Latest      Week    Year
      London (FT-SE 100)              4537.5      2.3     21.9
      Frankfurt (DAX)                 3552.0      3.3     43.3
      Tokyo (NIKKEI 225)              20,048.9    4.7     -6.7
      Hong Kong (Hang Seng)           13,605.9    5.4     27.1
      Toronto (TSE 300)               6113.5      2.3     18.3
      Mexico City (IPC)               3774.0      0.5     19.1
      
                                                      Week     Year
      FUNDAMENTALS                         Latest     ago      ago
      S&P 500 Dividend Yield               1.79%      1.86%    2.18%
      S&P 500 P/E Ratio (Last 12 mos.)     20.9       20.1     18.9    
      S&P 500 P/E Ratio (Next 12 mos.)*    17.1       16.6     NA      
      First Call Earnings Surprise*        3.52%      3.52%    NA      
      
                                                   Week
      TECHNICAL INDICATORS              Latest     ago      Reading
      S&P 500 200-day average           734.5      730.1    Positive
      Stocks above 200-day average      65.0%      56.0%    Neutral
      Options: Put/call ratio           0.56       0.58     Negative
      Insiders: Vickers Sell/buy ratio  1.72       1.76     Positive
      
      BEST-PERFORMING        Last    EQUITY FUND CATEGORIES  Last 12
      GROUPS                month%                            months%
      Machine Tools          22.4    Semiconductors          71.4
      Trucking               15.8    Savings & Loans         67.3
      Computer Software      14.9    Invest. Banking/Brkrge. 59.7
      Soft Drinks            14.8    Household Products      54.1
      Electrical Equipment   12.3    Drug Chains             50.0
      
      WORST-PERFORMING       Last                            Last 12
      GROUPS                 month%                           months%
      Engineering & Constr.  -5.1    Gold Mining             -29.8
      Oil & Gas Drilling     -4.6    Engineering & Constr.   -21.8
      Defense Electronics    -1.3    Defense Electronics     -10.4
      HMOs                   -0.2    Machine Tools           -9.4
      Pollution Control      -0.1    Broadcasting            -7.3    
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                  1-month
      significant buying on price weakness    Price     change
      Wells Fargo                             276 1/2    -4 5/8
      Micron Technology                       38 1/2     -3 3/8
      Novellus Systems                        77         -3 3/4
      Motorola                                61         -1/8
      United HealthCare                       49         -1 1/2
      United Waste Systems                    36 1/8     -1 3/8
      
      Decline ahead?  Stocks with most                  1-month
      significant selling on price strength   Price     change
      Intel                                   158        12 7/8
      Cisco Systems                           57 3/4     3 5/16
      3Com                                    35 3/4     1 3/8
      Ascend Communications                   49 1/2     1 7/8
      Sun Microsystems                        30 1/8     3/8
      Philip Morris                           41 3/4     4
      
      INTEREST RATES
      
                                           Latest     Week    Year
      KEY RATES                             week%     ago%    ago%
      MONEY MARKET FUNDS                    5.10      5.08    4.84
      90-DAY TREASURY BILLS                 5.22      5.28    5.14
      6-MONTH BANK CDS                      5.23      5.23    4.90
      1-YEAR TREASURY BILLS                 5.94      5.90    5.71
      10-YEAR TREASURY NOTES                6.75      6.72    6.87
      30-YEAR TREASURY BONDS                6.96      6.95    7.08
      LONG-TERM AA INDUSTRIALS              7.48      7.47    7.65
      LONG-TERM BBB INDUSTRIALS             7.93      7.92    8.03
      LONG-TERM AA TELEPHONES               7.72      7.71    7.91
      
      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     5.02%   5.05%   5.56%   5.59%
      PERCENT OF TREASURIES   74.40   75.23   79.90   80.37
      TAXABLE EQUIVALENT      7.28    7.32    8.06    8.10
      INSURED REVENUE BONDS   5.18    5.21    5.79    5.84
      PERCENT OF TREASURIES   76.77   77.58   83.20   83.97
      TAXABLE EQUIVALENT      7.51    7.55    8.39    8.46
      
      MUTUAL FUNDS
      
      EQUITY FUNDS
      Leaders                             Laggards
      Four-week total return         %    Four-week total return            %
      Yorktown Classic Value        13.9  Bull & Bear Gold Investors      -9.7
      Rydex Nova                    12.4  Morgan Stan. Inst. Gold A       -8.2
      DFA Japanese Small Co.        12.0  Midas                           -7.8
      Papp America-Abroad           11.5  Rydex Ursa                      -7.5
      Wasatch Micro-Cap             10.9  Lexington Strat. Invmnts.       -7.3
      
      Leaders                             Laggards
      52-week total return           %    52-week total return              %
      Legg Mason Value Primary      51.6  United Svcs. Gold Shares        -44.8
      Morgan Stan. Inst. Lat. Am. A 50.1  DFA Japanese Small Co.          -42.2
      Morgan Stanley Latin Amer. A  48.9  Steadman Technology Grth.       -37.8
      Fidelity Sel. Regional Banks  47.8  Fidelity Japan Small Co.        -36.9
      Fidelity Sel. Home Finance    46.1  Matthews Korea                  -36.5
      
      Leaders                             Laggards
      Four-week total return         %    Four-week total return            %
      Japan                         8.9   Precious Metals                 -4.8
      Large-cap Blend               6.5   Real Estate                     0.0
      Large-cap Growth              6.3   Diversified Emerging Mkts.      1.6
      Large-cap Value               5.9   Latin America                   2.0
      Financial                     5.7   Natural Resources               2.7
      
      Leaders                             Laggards
      52-week total return           %    52-week total return              %
      Financial                     39.5  Precious Metals                 -27.1
      Latin America                 31.7  Japan                           -16.0
      Real Estate                   30.8  Small Growth                    -7.1
      Large-cap Blend               25.1  Diversified Pacific/Asia        -4.1
      Large-cap Value               24.1  Pacific/Asia ex-Japan           1.4
      
      All data are as of market close Wednesday, May 7, 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 May 6. 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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