COMMENTARY

The stock market was cheered by reports of a rise in U.S. personal income and

spending in October, as well as by gains in the Japanese stock market. Optimism

that Japan's economy would stabilize sparked a 2.4% gain for the Dow Jones

industrial average on Dec. 1, and the Dow revisited 8000 for the first time in

almost six weeks. Asian markets were firmer, as South Korea agreed to a $55

billion bailout led by the International Monetary Fund. Gold prices continued

to fall on signs that inflation was dead in the water.

      
                                                 % change
      U.S. MARKETS               Latest     Week       Year
      
      Dow Jones Industrials      8032.0      2.9       25.1
      NASDAQ Combined Composite  1615.1      1.6       24.5
      S&P MidCap 400              328.8      2.8       28.5
      S&P SmallCap 600            179.4      1.7       23.8
      S&P SuperComposite 1500     209.6      2.7       30.5
      
                                              % change
      SECTORS                     Latest   Week      Year
      
      Bloomberg Information Age   302.6     2.6       28.5
      S&P Financials              119.0     5.8       45.2
      S&P Utilities               219.8     0.2        9.9
      PSE Technology              304.9     1.3       20.9
      
                                                   % change
      FOREIGN MARKETS              Latest       Week      Year
      
      London (FT-SE 100)           4970.7        2.2      22.9
      Frankfurt (DAX)              4082.9        6.1      42.5
      Tokyo (NIKKEI 225)         16,585.5        4.5     -19.7
      Hong Kong (Hang Seng)      11,207.6        8.5     -16.6
      Toronto (TSE 300)            6681.2        0.8      13.0
      Mexico City (IPC)            5127.9        7.1      51.2
      
                                                         Week     Year
      FUNDAMENTALS                            Latest     ago       ago
      
      S&P 500 Dividend Yield                  1.57 %     1.61 %    1.94 %
      S&P 500 P/E Ratio (Last 12 mos.)        24.6       23.9      20.8
      S&P 500 P/E Ratio (Next 12 mos.)*       19.1       18.7      16.2
      First Call Earnings Revision*          -1.01 %    -0.98 %   -0.95
      
                                                         Week
      TECHNICAL INDICATORS                   Latest      ago         Reading
      
      S&P 500 200-day average                 880.8      876.9       Positive
      Stocks above 200-day average            69.0 %      68.0 %     Neutral
      Options: Put/call ratio                 0.60        0.65       Neutral
      Insiders: Vickers Sell/buy ratio        2.75        2.81       Negative
      
      BEST-PERFORMING          Last                                Last 12
      GROUPS                   month%                              months%
      
      Manufactured Housing      22.6      Trucking                  156.0
      Regional Telephone Cos.   15.5      Invest. Banking/Brkrge.    85.7
      Drug Chains               12.8      Savings & Loans            77.9
      Personal Loans            11.4      Homebuilding               61.8
      Long-Dist. Telecom.       11.1      Drug Chains                59.0
      
      WORST-PERFORMING         Last                                Last 12
      GROUPS                   month%                              months%
      
      Gold Mining              -20.6      Engineering & Constr.     -40.1             
        Metals              -13.9               Gold Mining         -38.3
      Oil & Gas Drilling       -12.4      Metals                    -29.6
      Oil Exploration & Prod.   -9.7      Photography/Imaging       -24.4
      Oil-Well Equip. & Svcs,   -9.0      Pollution Control         -13.7
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                            1-month
      significant buying on price weakness    Price               change
      
      Telebras-ADR                          109                    -3
      Citicorp                              128                    -1 3/8
      Texas Instruments                      46 1/2               -11 1/16
      Oregon Metallurgical                   32 1/8                -1 3/4
      Chase Manhattan                       114                    -4 11/16
      Warner-Lambert                        118 5/16              -20 13/16
      
      Decline ahead?  Stocks with most                              1-month
      significant selling on price strength  Price                  change
      
      Cisco Systems                          86 1/2                 1 3/4
      Dell Computer                          88 5/16                5 1/16
      Sun Microsystems                       37 13/16               1 3/16
      Boeing                                 54                     6 5/16
      Starbucks                              37 5/8                 4 3/16
      American International Group          105 15/16               1 13/16
      
      Data: Bloomberg Financial Markets; *First Call Corp.
      
                                   Latest        Week        Year
      KEY RATES                    week%         ago%        ago%
      
      MONEY MARKET FUNDS            5.18         5.17        4.95
      90-DAY TREASURY BILLS         5.23         5.30        5.05
      6-MONTH BANK CDS              5.20         5.19        5.00
      1-YEAR TREASURY BILLS         5.49         5.49        5.39
      10-YEAR TREASURY NOTES        5.82         5.85        6.06
      30-YEAR TREASURY BONDS        6.01         6.06        6.35
      LONG-TERM AA INDUSTRIALS      6.55         6.65        6.90
      LONG-TERM BBB INDUSTRIALS     6.97         7.03        7.32
      LONG-TERM AA TELEPHONES       6.96         6.93        7.05
      
      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%    4.59%     5.11%     5.17%
      PERCENT OF TREASURIES     77.85    78.65     85.00     85.46
      TAXABLE EQUIVALENT         6.57     6.65      7.41      7.49
      INSURED REVENUE BONDS      4.63     4.69      5.30      5.36
      PERCENT OF TREASURIES     79.57    80.36     88.16     88.60
      TAXABLE EQUIVALENT         6.71     6.80      7.68      7.77
      
      EQUITY FUNDS
      Leaders                                   Laggards
      Four-week total return        %           Four-week total return       %
      
      Smith Barney Telecom. Inc.   10.5         Matthews Korea             -39.8
      Countrywide Utility A         9.2         Blanchard Precious Metals  -31.2
      Am. Cent. Utilities           8.8         Midas                      -29.5
      Princor Utilities A           8.8         Invesco Strategic Gold     -27.6
      Icon Telecom. & Utilities     7.3         IDS Precious Metals B      -24.7
      
      Leaders                                   Laggards
      52-week total return          %           52-week total return         %
      
      Fidelity Select Brokerage    63.3         Midas                      -61.0
      Hartford Capital Apprec. A   62.7         Matthews Korea             -60.1
      American Heritage            62.5         U.S. Global Investors Gold -59.2
      Mutual Shares II             62.0         Invesco Strategic Gold     -57.3
      Evergreen U.S. Real Est. Y   61.1         Morgan Stan. Instl. Gold A -57.2
      
      EQUITY FUND CATEGORIES
      Leaders                                   Laggards
      Four-week total return         %          Four-week total return        %
      
      Utilities                     5.1         Precious Metals            -20.9
      Financial                     3.6         Natural Resources           -9.7
      Large-cap Value               2.0         Diversified Emerging Mkts.  -7.6
      Large-cap Blend               1.9         Pacific/Asia ex-Japan       -7.0
      Communications                1.1         Technology                  -5.9
      
      Leaders                                   Laggards
      52-week total return          %           52-week total return         %
      
      Financial                    40.2         Precious Metals            -44.6
      Small-cap Value              29.8         Pacific/Asia ex-Japan      -29.9
      Real Estate                  29.7         Diversified Pacific/Asia   -22.8
      Mid-cap Value                26.7         Japan                      -16.7
      Large-cap Blend              25.9         Diversified Emerging Mkts.  -2.7
      
      All data are as of market close Wednesday, Dec. 3, 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 Dec. 2. 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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