COMMENTARY

A barn-burning week in the financial markets. The Dow Jones industrial average,

after declining below 7900 on July 18, staged a powerful rally in the days that

followed, climbing to almost 8100. Interest rates tumbled, while companies

generally reported strong earnings. The market's activity was largely sparked

by Federal Reserve chairman Alan Greenspan, who testified in Congress on July

22 that the recent U.S. economic performance is "exceptional." The dollar,

also reacting to Greenspan's testimony, rose to a six-year high vs. the mark.

STOCKS

      
                                             % change
      U.S. MARKETS               Latest    Week    Year
      Dow Jones Industrials      8088.4     0.6    51.1
      NASDAQ Combined Composite  1567.7    -0.8    50.4
      S&P MidCap 400             307.1      0.2    43.3
      S&P SmallCap 600           168.2     -0.6    36.8
      S&P SuperComposite 1500    200.3      0.0    48.1
      
                                                % change
      SECTORS                         Latest  Week    Year
      Bloomberg Information Age       296.1   -0.4    62.4
      S&P Financials                  105.9    0.6    64.8
      S&P Utilities                   197.6   -2.2    5.5
      PSE Technology                  324.6    0.4    81.1
      
                                            % change
      FOREIGN MARKETS           Latest    Week    Year
      London (FT-SE 100)        4874.5    -1.8     32.9
      Frankfurt (DAX)           4406.1     4.9     80.0
      Tokyo (NIKKEI 225)        20,130.5  -1.1    -2.4
      Hong Kong (Hang Seng)     15,738.8   1.9     47.1
      Toronto (TSE 300)         6765.2     0.3     37.5
      Mexico City (IPC)         4742.1    -0.9     57.9
      
                                                       Week       Year
      FUNDAMENTALS                           Latest     ago       ago
      S&P 500 Dividend Yield                 1.60%     1.62%      2.29%
      S&P 500 P/E Ratio (Last 12 mos.)       23.4      23.5       18.0
      S&P 500 P/E Ratio (Next 12 mos.)*      19.0      18.8       NA
      First Call Earnings Surprise*          2.55%     1.87%      NA
      
                                                       Week
      TECHNICAL INDICATORS               Latest        ago      Reading
      S&P 500 200-day average            790.0         784.2    Positive
      Stocks above 200-day average       80.0%         80.0%    Negative
      Options: Put/call ratio            0.45          0.45     Negative
      Insiders: Vickers Sell/buy ratio   2.83          2.42     Negative
      
      BEST-PERFORMING         Last                           Last 12
      GROUPS                 month%                          months%
      Computer Systems        23.4    Semiconductors          127.7
      Oil & Gas Drilling      22.8    Trucking                117.5
      Semiconductors          20.5    Computer Systems        113.6
      Oil-Well Equip. & Svcs. 20.2    Invest. Banking/Brkrge. 104.6
      Communications Equip.   16.7    Savings & Loans         103.8
      
      WORST-PERFORMING           Last                          Last 12
      GROUPS                     month%                        months%
      Metal & Glass Containers   -9.8    Gold Mining            -19.9
      Photography/Imaging        -6.5    Photography/Imaging    -6.9
      Hospital Management        -4.0    Manufactured Housing   -1.2
      Long-Dist. Telecomm.       -3.9    Engineering & Constr.  -0.9
      Pollution Control          -2.7    Electric Companies      1.1
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                    1-month
      significant buying on price weakness    Price       change
      Telebras-ADR                            143 1/8     -1 5/8
      Pennzoil                                76 1/2      -7/8
      Bell Atlantic                           74 3/16     -9/16
      Nynex                                   56 5/8      -1/4
      United Healthcare                       53          -1 1/4
      Wells Fargo                             259 3/4     -16 5/8
      Decline ahead?  Stocks with most                     1-month
      significant selling on price strength   Price        change
      Intel                                   88  3/4      16 5/32
      Microsoft                               144 1/8      16 1/16
      Dell Computer                           160          40 9/16
      Ascend Communications                   52 1/2       12 1/16
      Amgen                                   59 5/16         7/16
      Pfizer                                  61           5  3/8
      
      INTEREST RATES
      
                                      Latest  Week    Year
      KEY RATES                       week%   ago%    ago%
      MONEY MARKET FUNDS              5.16    5.16    4.93
      90-DAY TREASURY BILLS           5.19    5.17    5.30
      6-MONTH BANK CDS                5.18    5.18    5.04
      1-YEAR TREASURY BILLS           5.51    5.51    5.85
      10-YEAR TREASURY NOTES          6.15    6.20    6.80
      30-YEAR TREASURY BONDS          6.43    6.48    6.97
      LONG-TERM AA INDUSTRIALS        6.90    6.94    7.47
      LONG-TERM BBB INDUSTRIALS       7.24    7.32    7.92
      LONG-TERM AA TELEPHONES         7.13    7.18    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     4.53%   4.61%   5.10%   5.18%
      PERCENT OF TREASURIES   73.72   74.58   79.33   80.00
      TAXABLE EQUIVALENT      6.57    6.68    7.39    7.51
      INSURED REVENUE BONDS   4.67    4.72    5.32    5.37
      PERCENT OF TREASURIES   75.99   76.36   82.75   82.93
      TAXABLE EQUIVALENT      6.77    6.84    7.71    7.78
      
      MUTUAL FUNDS
      
      EQUITY FUNDS
      Leaders                               Laggards
      Four-week total return         %      Four-week total return        %
      Fidelity Select Energy Serv.  17.1    Gabelli Gold               -12.7
      Van Wagoner Mid-Cap           16.9    Invesco Strategic Gold     -11.5
      Fidelity Select Computers     16.3    Bull & Bear Gold Investors -11.0
      Robertson Steph. Info. Age A  15.5    Midas                      -11.0
      Amerindo Technology D         15.2    Van Eck Gold Opport. A     -10.7
      
      Leaders                               Laggards
      52-week total return           %      52-week total return          %
      Lexington Troika Russia       125.8   United Svcs. Gold Shares   -46.5
      ITT Hartford Cap. Apprec. A   97.4    Bull & Bear Gold Investors -42.2
      Fidelity Select Electronics   91.4    Morgan Stan. Inst. Gold A  -40.6
      Pioneer Growth A              78.8    Lexington Strat. Invmts.   -38.6
      Rydex OTC                     77.7    Midas                      -36.0
      
      EQUITY FUND CATEGORIES
      Leaders                               Laggards
      Four-week total return         %      Four-week total return        %
      Technology                    10.2    Precious Metals             -6.7
      Mid-cap Growth                6.6     Diversified Pacific/Asia     0.1
      Large-cap Growth              6.2     Diversified Emerging Markets 0.2
      Small-cap Growth              6.1     Japan                        0.3
      Small-cap Blend               5.3     Latin America                0.4
      
      Leaders                               Laggards
      52-week total return           %      52-week total return          %
      Financial                     54.9    Precious Metals             -27.0
      Technology                    50.1    Japan                       -3.2
      Large-cap Growth              44.7    Diversified Pacific/Asia     6.5
      Large-cap Blend               43.3    Pacific/Asia ex-Japan        10.4
      Latin America                 43.1    Utilities                    19.7
      
      All data are as of market close Wednesday, July 23, 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 July 22. 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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