COMMENTARY

Stocks retreated from near-record levels as fears that tech stocks will fail

to meet earnings projections put investors into the sell mode. Intel, Cabletron

Systems, and Seagate Technology took big hits, and the Pacific High Technology

Index, which posted a record on May 28, tumbled 5.6% for the week. The Dow

industrials and the Standard & Poor's 500-stock index fared a lot better, with

declines of 1.2% and 0.8%, respectively. The rally in bonds helped the blue

chips. South of the border, the Mexican Bolsa surged 5.5%, hitting a high for

the year.

      
                                                      % change
      U.S. MARKETS                     Latest       Week    Year
      
      Dow Jones Industrials            7269.7       -1.2    28.3
      NASDAQ Combined Composite        1379.7       -2.2    10.9
      S&P MidCap 400                    279.4        0.8    15.4
      S&P SmallCap 600                  156.5        1.7    11.6
      
                                                      % change
      SECTORS                          Latest       Week    Year
      
      S&P SuperComposite 1500           180.2       -0.6    23.3
      Bloomberg Information Age         254.4       -4.9    21.4
      S&P Financials                     95.3        2.0    40.8
      S&P Utilities                     191.8        0.0     0.9
      PSE Technology                    270.7       -5.6    21.7
      
                                                      % change
      FOREIGN MARKETS                  Latest       Week    Year
      
      London (FT-SE 100)               4557.1       -2.6    21.4
      Frankfurt (DAX)                  3661.8        0.7    43.8
      Tokyo (NIKKEI 225)             20,611.6        1.3    -5.7
      Hong Kong (Hang Seng)          14,831.6        1.9    33.8
      Toronto (TSE 300)                6428.6        0.6    23.0
      Mexico City (IPC)                4121.6        5.5    27.7
      
                                                    Week    Year
      FUNDAMENTALS                     Latest       ago     ago
      
      S&P 500 Dividend Yield             1.76 %      1.75 %  2.10 %
      S&P 500 P/E Ratio (Last 12 mos.)  21.4        21.4    19.7
      S&P 500 P/E Ratio (Next 12 mos.)* 17.5        17.6     NA
      First Call Earnings Revision*     -1.44 %     -0.73 %  NA
      
                                                    Week
      TECHNICAL INDICATORS             Latest       ago     Reading
      
      S&P 500 200-day average          752.3       747.7    Positive
      Stocks above 200-day average      73.0 %      70.0 %  Negative
      Options: Put/call ratio            0.53        0.47   Negative
      Insiders: Vickers Sell/buy ratio   1.36        1.33   Positive
      
      BEST-PERFORMING           Last                          Last 12
      GROUPS                    month%                        months%
      
      Oil & Gas Drilling        29.8      Savings & Loans         62.5
      Oil-Well Equip. & Svces.  12.7      Oil & Gas Drilling      53.6
      Housewares                10.6      Semiconductors          52.9
      HMOs                      10.0      Invest. Banking/Brkrge. 51.9
      Forest Products            9.0      Computer Software       46.0
      
      WORST-PERFORMING          Last                           Last 12
      GROUPS                    month%                         months%
      
      Semiconductors            -8.4      Gold Mining            -27.8
      Restaurants               -8.1      Engineering & Constr.  -15.5
      Commercial Services       -3.2      Defense Electronics     -9.7
      Engineering & Constr.     -3.2      Hotels & Motels         -7.5
      Building Materials        -2.7      Manufactured Housing    -7.1
      
      BLOOMBERG MONEY FLOW ANALYSIS
      
      Rebound ahead?  Stocks with most                         1-month
      significant buying on price weakness    Price             change
      
      Applied Materials                      61 9/16             -3/16
      Texas Instruments                      83 7/8            -9 7/8
      Cascade Communications                 34 5/16           -1 9/16
      Novellus Systems                       74 7/8            -3 7/8
      Cabletron Systems                      30 1/4            -6 5/8
      VeriFone                               51 1/2            -2 3/8
      
      Decline ahead?  Stocks with most                         1-month
      significant selling on price strength   Price             change
      
      Microsoft                             120 3/4               3/4
      Dell Computer                         108 1/8            15 7/8
      3Com                                   45 15/16          10 1/4
      Cisco Systems                          64  3/4            5 7/8
      Worldcom                               28 11/16           2 11/16
      Premier Laser Systems-A                12                 5  1/8
      
                                         Latest     Week     Year
      KEY RATES                          week%      ago%     ago%
      
      MONEY MARKET FUNDS                 5.15        5.14    4.85
      90-DAY TREASURY BILLS              5.06        5.18    5.20
      6-MONTH BANK CDS                   5.22        5.23    4.96
      1-YEAR TREASURY BILLS              5.75        5.91    5.78
      10-YEAR TREASURY NOTES             6.62        6.80    6.86
      30-YEAR TREASURY BONDS             6.88        7.03    7.00
      LONG-TERM AA INDUSTRIALS           7.39        7.56    7.55
      LONG-TERM BBB INDUSTRIALS          7.80        7.93    7.92
      LONG-TERM AA TELEPHONES            7.64        7.78    7.81
      
      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             4.87%   4.93%    5.44%   5.52%
      PERCENT OF TREASURIES          73.59   72.63    79.09   78.57
      TAXABLE EQUIVALENT              7.06    7.14     7.88    8.00
      INSURED REVENUE BONDS           4.98    5.06     5.63    5.71
      PERCENT OF TREASURIES          75.25   74.54    81.85   81.27
      TAXABLE EQUIVALENT              7.22    7.33     8.16    8.28
      
      EQUITY FUNDS
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return         %
      
      Fidelity Sel. Energy Serv.      16.8    Steadman American Industry   -7.5
      Van Wagoner Post-Venture        14.2    Steadman Technology Grth.    -7.2
      Keystone Am. Hart. Emer. Gr. A  13.9    Steadman Associated          -6.3
      Invesco Worldwide Cap           13.0    Fontaine Global Growth       -5.5
      HSBC Small Cap                  11.8    Fidelity Select Computers    -3.8
      
      Leaders                                 Laggards
      52-week total return              %     52-week total return          %
      
      Morgan Stan. Inst. Lat. Am. A   53.9    Frontier Equity             -52.1
      Morgan Stanley Latin Amer. A    52.3    United Svcs. Gold Shares    -48.1
      Fidelity Sel. Energy Serv.      45.6    Steadman Technology Grth.   -46.2
      Davis Financial A               45.2    Bull & Bear Gold Investors  -40.3
      Legg Mason Value Primary        44.9    Perkins Opportunity         -38.7
      
      EQUITY FUND CATEGORIES
      
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return         %
      
      Japan                            7.7    Precious Metals               0.9
      Small-cap Growth                 7.3    Real Estate                   1.0
      Natural Resources                6.9    Utilities                     1.7
      Small-cap Blend                  6.5    Europe                        1.8
      Diversified Pacific/Asia         5.8    International Hybrid          2.1
      
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return         %
      
      Financial                       37.5    Precious Metals             -29.7
      Latin America                   33.5    Japan                        -6.4
      Real Estate                     29.2    Small-cap Growth             -5.3
      Large-cap Value                 23.7    Diversified Pacific/Asia      3.4
      Large-cap Blend                 23.7    Mid-cap Growth                3.8
      
      All data are as of market close Wednesday, June 4, 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 June 3. 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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