COMMENTARY

Despite a 78-point pasting on Jan. 21, the Dow industrials managed to close up

for the week. The big casualty: IBM, which tumbled 8 1/4, the result of its

warning that the strong dollar will hurt earnings in the first quarter.

Interest rates backed up a bit, as concerns over Asia abated. The Nikkei scored

an impressive 10.3% gain in just four trading days. The Mexican bolsa is down

sharply since the start of the year due to the drop in oil prices, a factor

that is sure to translate into a decline in revenues for oil-rich Mexico. The

peso also weakened.

                                                  % change
      U.S. MARKETS                  Latest     Week      Year
      
      Dow Jones Industrials         7794.4      0.1      13.8
      NASDAQ Combined Composite     1587.9      2.5      14.4
      S&P MidCap 400                 324.6      1.4      21.8
      S&P SmallCap 600               177.8      2.3      20.1
      S&P SuperComposite 1500        208.1      1.4      23.2
      
                                                  % change
      SECTORS                        Latest      Week    Year
      
      Bloomberg Information Age      301.6       1.9      21.5
      S&P Financials                 114.3       0.1      30.3
      S&P Utilities                  228.4      -0.5      11.4
      PSE Technology                 293.6       2.3      10.6
      
                                                 % change
      FOREIGN MARKETS             Latest      Week       Year
      
      London (FT-SE 100)          5272.3       3.2       25.0
      Frankfurt (DAX)             4282.8       2.2       41.4
      Tokyo (NIKKEI 225)        16,684.4      10.3       -7.4
      Hong Kong (Hang Seng)       9246.8       0.2      -32.5
      Toronto (TSE 300)           6494.6       2.3        7.2
      Mexico City (IPC)           4617.7      -0.7       24.5
      
                                                      Week        Year
      FUNDAMENTALS                        Latest       ago        ago
      
      S&P 500 Dividend Yield               1.57 %      1.60 %     1.85 %
      S&P 500 P/E Ratio (Last 12 mos.)     24.3        23.8       21.8
      S&P 500 P/E Ratio (Next 12 mos.)*    19.3        18.7       16.7
      First Call Earnings Surprise*        1.62 %      3.12 %     2.63 %
      
                                                       Week
      TECHNICAL INDICATORS                Latest        ago      Reading
      
      S&P 500 200-day average             908.0        903.8     Positive
      Stocks above 200-day average         63.0 %       57.0 %   Neutral
      Options: Put/call ratio              0.52         0.68     Negative
      Insiders: Vickers Sell/buy ratio     1.76         1.80     Positive
      
      BEST-PERFORMING             Last                               Last 12
      GROUPS                     month%                              months%
      
      Defense Electronics         22.7    Trucking                    139.8
      Trucking                    18.2    Specialty Appar. Retailers   74.4
      Transportation Services     13.9    Airlines                     67.1
      Specialty Appar. Retailers  10.8    Broadcasting                 66.4
      Drug Chains                 10.3    Homebuilding                 58.2
      
      WORST-PERFORMING           Last                                Last 12
      GROUPS                     month%                              months%
      
      Savings & Loans             -7.9    Engineering & Constr.       -42.3
      Invest. Banking/Brkrge.     -7.7    Metals                      -41.9
      Pollution Control           -7.6    Shoes                       -36.3
      Oil & Gas Drilling          -6.0    Gold Mining                 -35.1
      Money Center Banks          -5.9    Photography/Imaging         -30.0
      
                          BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                          1-month
      significant buying on price weakness    Price            change
      
      Citicorp                               119              -8 3/16
      Wells Fargo                            329 3/4          -3
      Coca-Cola                               65 15/16          -1/8
      SBC Communications                      75 9/16           -7/16
      BJ Services                             62 3/16         -4 1/8
      BankAmerica                             69 1/16         -3 9/16
      
      Decline ahead?  Stocks with most                         1-month
      significant selling on price strength   Price            change
      
      Intel                                   76 1/4           4 13/16
      Cisco Systems                           59 1/2           4 7/8
      Applied Materials                       30 3/4             1/4
      L.M. Ericsson-ADR                       39 15/16         5 1/4
      PeopleSoft                              35 3/16            7/8
      KLA-Tencor                              40 7/16            9/16
      
      Data: Bloomberg Financial Markets; *First Call Corp.
      
                                  Latest     Week      Year
      KEY RATES                   week%      ago%      ago%
      
      MONEY MARKET FUNDS           5.21      5.23      4.96
      90-DAY TREASURY BILLS        5.12      5.17      5.16
      6-MONTH BANK CDS             5.14      5.18      5.02
      1-YEAR TREASURY BILLS        5.21      5.17      5.57
      10-YEAR TREASURY NOTES       5.54      5.41      6.55
      30-YEAR TREASURY BONDS       5.81      5.71      6.83
      LONG-TERM AA INDUSTRIALS     6.44      6.35      7.32
      LONG-TERM BBB INDUSTRIALS    6.83      6.70      7.74
      LONG-TERM AA TELEPHONES      6.77      6.68      7.52
      
                      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       4.26%      4.24%      4.84%      4.82%
      PERCENT OF TREASURIES    76.96      77.80      83.31      84.03
      TAXABLE EQUIVALENT        6.17       6.14       7.01       6.99
      INSURED REVENUE BONDS     4.38       4.35       5.05       5.02
      PERCENT OF TREASURIES    79.13      79.82      86.93      87.52
      TAXABLE EQUIVALENT        6.35       6.30       7.32       7.28
      
      EQUITY FUNDS
      Leaders                               Laggards
      Four-week total return         %      Four-week total return          %
      
      Matthews Korea                64.0    Lexington Crosby Sm. Asia     -18.8
      DFA Japanese Small Co.        14.5    US Global Inv. China Reg.     -18.4
      Barr Rosenberg Japan Instl.   11.8    Guinness Flgt. Asia Sm. Cap   -17.8
      Oberweis Mid-Cap               9.9    Montgomery Emerg. Asia R      -16.3
      Merrill Asset Income A         9.8    Colonial Newport Gr. China A  -15.6
      
      Leaders                               Laggards
      52-week total return           %      52-week total return            %
      
      Pilgrim Amer. Bank & Thr. A   53.3    Midas                         -60.6
      FBR Small Cap Financial       52.0    Bull & Bear Gold Investors    -59.0
      Evergreen U.S. Real Est. Y    48.7    Invesco Strategic Gold        -58.1
      American Heritage             48.4    US Global Investors Gold      -57.5
      Fidelity Select Retailing     47.7    Morgan Stan. Instl. Gold A    -57.0
      
      EQUITY FUND CATEGORIES
      Leaders                               Laggards
      Four-week total return          %     Four-week total return           %
      
      Japan                          7.7    Pacific/Asia ex-Japan          -7.7
      Technology                     5.9    Latin America                  -3.3
      Large-cap Growth               5.3    Diversified Emerging Mkts.     -2.9
      Communications                 5.2    Precious Metals                -2.9
      Health                         5.1    Diversified Pacific/Asia       -0.5
      
      Leaders                               Laggards
      52-week total return            %     52-week total return            %
      
      Financial                     37.0    Precious Metals               -43.4
      Communications                25.1    Pacific/Asia ex-Japan         -42.9
      Large-cap Blend               23.6    Diversified Pacific/Asia      -28.1
      Small-cap Value               22.9    Diversified Emerging Mkts.    -16.5
      Unaligned                     22.8    Japan                          -9.5
      
      All data are as of market close Wednesday, Jan. 21, 1998, 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 Jan. 20. 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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