COMMENTARY

The stock market finally shrugged off the blahs on Dec. 29, with a 113-point

rally in the Dow industrials, a rise of 1.5%. The S&P 500 did better, logging a

1.8% gain. Still, both averages are struggling to finish December in the black.

Investors continue to worry if the troubles in Asia will hurt the earnings of

the market-leading U.S. multinationals and technology companies. Asia markets

are still under siege. The Nikkei 225 is back under 15,000, and Korean stocks

continue to sink even in the face of a strengthening currency.

      
                                                            % change
      U.S. MARKETS                         Latest       Week        Year
      Dow Jones Industrials                7792.4       1.3         19.0
      NASDAQ Combined Composite            1537.5       1.8         19.4
      S&P MidCap 400                        325.0       1.5         27.3
      S&P SmallCap 600                      176.8       1.1         22.3
      S&P SuperComposite 1500               204.9       1.5         26.4
      
                                                           % change
      SECTORS                              Latest      Week         Year
      Bloomberg Information Age             289.1       1.8         23.8
      S&P Financials                        116.3       1.1         38.3
      S&P Utilities                         234.2       1.1         16.6
      PSE Technology                        282.8       1.5         16.0
      
                                                          % change
      FOREIGN MARKETS                      Latest      Week         Year
      London (FT-SE 100)                   5112.4       1.2         24.2
      Frankfurt (DAX)                      4197.4       1.8         45.3
      Tokyo (NIKKEI 225)                 14,775.2      -0.2        -23.7
      Hong Kong (Hang Seng)              10,503.0       1.3        -22.1
      Toronto (TSE 300)                    6650.0       1.5         11.7
      Mexico City (IPC)                    5120.6       4.0         53.0
      
                                                       Week         Year
      FUNDAMENTALS                           Latest     ago         ago
      S&P 500 Dividend Yield                 1.61%     1.60%        1.90%
      S&P 500 P/E Ratio (Last 12 mos.)       23.6      24.1         21.2
      S&P 500 P/E Ratio (Next 12 mos.)*      18.6      19.0         16.4
      First Call Earnings Revision*         -1.76%    -1.68%       -0.06%
      
                                                       Week
      TECHNICAL INDICATORS                 Latest      ago          Reading
      S&P 500 200-day average               894.2     892.2         Positive
      Stocks above 200-day average           62.0%     63.0%        Neutral
      Options: Put/call ratio                0.58      0.76         Negative
      Insiders: Vickers Sell/buy ratio       2.03      2.03         Neutral
      
                                            Latest     Week         Year
      KEY RATES                              week%     ago%         ago%
      MONEY MARKET FUNDS                     5.25      5.24         4.95
      90-DAY TREASURY BILLS                  5.38      5.47         5.14
      6-MONTH BANK CDS                       5.21      5.21         5.01
      1-YEAR TREASURY BILLS                  5.52      5.50         5.43
      10-YEAR TREASURY NOTES                 5.76      5.70         6.30
      30-YEAR TREASURY BONDS                 5.92      5.87         6.54
      LONG-TERM AA INDUSTRIALS               6.55      6.54         7.05
      LONG-TERM BBB INDUSTRIALS              6.88      6.87         7.51
      LONG-TERM AA TELEPHONES                6.89      6.88         7.24
      
      BEST-PERFORMING          Last                                Last 12
      GROUPS                  month%                               months%
      
      Manufactured Housing     17.0        Trucking                 133.3
      Electric Companies        7.1        Invest. Banking/Brkrge.   67.9
      Pollution Control         6.5        Savings & Loans           66.3
      Cosmetics                 6.4        Broadcasting              60.1
      Commercial Services       6.4        Homebuilding              56.1
      
      WORST-PERFORMING        Last                                  Last 12
      GROUPS                  month%                                months%
      Shoes                   -21.4        Engineering & Constr.    -39.5
      Oil & Gas Drilling      -15.1        Gold Mining              -37.3
      Metals                  -14.9        Shoes                    -36.3
      Trucking                -14.9        Metals                   -36.3
      Machine Tools           -14.8        Photography/Imaging      -28.3
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                       1-month
      significant buying on price weakness    Price         change
      Citicorp                               121 15/16      -7 1/2
      Chase Manhattan                        106 11/16      -8 5/16
      IBM                                    101 11/16     -10 7/8
      Coca-Cola                               64 3/8        -  3/16
      J.P. Morgan                            111 7/16       -9 5/16
      Microsoft                              120 3/4       -23 1/16
      Eli Lilly                               67 13/16       2 3/8
      Sun Microsystems                        38 11/16         5/16
      Comcast                                 30 3/8         2
      HBO                                     45 7/8           13/16
      Chubb                                   74 3/8         2 5/8
      Qwest Communications Intl.              60             5 7/8
      
      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       4.40%    4.40%        4.98%     4.98%
      PERCENT OF TREASURIES    76.47    77.22        84.10     84.82
      TAXABLE EQUIVALENT        6.38     6.38         7.22      7.22
      INSURED REVENUE BONDS     4.50     4.50         5.17      5.17
      PERCENT OF TREASURIES    78.20    78.97        87.31     88.05
      TAXABLE EQUIVALENT        6.52     6.52         7.49      7.49
      
      EQUITY FUNDS
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return           %
      
      Lexington Strategic Silver     11.0     DFA Japanese Small Co.       -19.0
      Blanchard Precious Metals      10.6     Merrill Technology A         -18.1
      Keystone Precious Metals        7.7     MFS Managed Sectors B        -17.5
      Lexington Strat. Invmnts.       7.6     Fidelity Select Computers    -16.5
      Amer. Century Global Gold       7.5     Van Wagoner Micro-Cap        -15.1
      
      Leaders                                 Laggards
      52-week total return              %     52-week total return             %
      
      American Heritage              68.5     Midas                        -58.5
      Lexington Troika Russia        64.0     U.S. Global Investors Gold   -57.5
      Armada Equity Grth. Instl.     58.2     Bull & Bear Gold Investors   -56.2
      Evergreen U.S. Real Est. Y     55.7     DFA Japanese Small Co.       -55.5
      Fidelity Sel. Brokerage        55.2     Invesco Strategic Gold       -55.0
      
      EQUITY FUND CATEGORIES
      
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return         %
      Precious Metals                 3.9     Technology                  -9.0
      Utilities                       3.4     Japan                       -6.8
      Financial                       2.6     Diversified Pacific/Asia    -5.3
      Europe                          0.5     Natural Resources           -5.1
      Real Estate                     0.1     Small-cap Growth            -5.1
      
      Leaders                                 Laggards
      52-week total return%                   52-week total return           %
      Financial                      39.4     Precious Metals            -41.9
      Small-cap Value                25.0     Pacific/Asia ex-Japan      -34.4
      Utilities                      23.4     Diversified Pacific/Asia   -26.9
      Mid-cap Value                  23.4     Japan                      -19.1
      Communications                 22.8     Diversified Emerging Mkts.  -6.2
      
      All data are as of market close Monday, Dec. 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 Dec. 26. 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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