COMMENTARY

It's earnings season, and some surprisingly good results from companies such as

Walt Disney and American Express changed the tenor of the stock market in a

hurry. Instead of fretting what damage the Asian contraction will do to

corporate profits, investors started to think profits might be in better shape

than they had expected. The Dow industrials piled on 102 points on Jan. 27 and

followed up with 100 points on Jan. 28. Technology stocks surged, energized by

Compaq Computer's bold plan to acquire Digital Equipment.

      
                                                     % change
      U.S. MARKETS                   Latest        Week    Year
      
      Dow Jones Industrials          7915.5        1.6     17.4
      NASDAQ Combined Composite      1610.8        1.4     18.9
      S&P MidCap 400                  325.2        0.2     24.6
      S&P SmallCap 600                177.0       -0.4     21.0
      S&P SuperComposite 1500         209.4        0.6     26.1
      
                                                     % change
      SECTORS                        Latest        Week      Year
      
      Bloomberg Information Age       308.2         2.2      26.3
      S&P Financials                  114.8         0.5      33.1
      S&P Utilities                   226.8        -0.7      13.9
      PSE Technology                  298.8         1.8      14.2
      
                                                  % change
      FOREIGN MARKETS             Latest      Week       Year
      
      London (FT-SE 100)          5372.6       1.9       27.7
      Frankfurt (DAX)             4391.0       2.5       46.4
      Tokyo (NIKKEI 225)        16,973.8       1.7       -7.4
      Hong Kong (Hang Seng)       9252.4       0.1      -30.4
      Toronto (TSE 300)           6731.1       3.6       10.9
      Mexico City (IPC)           4546.3      -1.5       25.2
      
                                                      Week        Year
      FUNDAMENTALS                         Latest      ago        ago
      
      S&P 500 Dividend Yield                1.59 %     1.57 %      1.89 %
      S&P 500 P/E Ratio (Last 12 mos.)      24.1       24.3        20.2
      S&P 500 P/E Ratio (Next 12 mos.)*     19.2       19.3        16.3
      First Call Earnings Surprise*         2.56 %     1.62 %      2.11 %
      
                                                          Week
      TECHNICAL INDICATORS                   Latest       ago       Reading
      
      S&P 500 200-day average                914.3       908.0      Positive
      Stocks above 200-day average            59.0 %      63.0 %    Neutral
      Options: Put/call ratio                 0.57        0.52      Negative
      Insiders: Vickers Sell/buy ratio        1.58        1.76      Positive
      
      BEST-PERFORMING               Last                                  Last 12
      GROUPS                       month%                                 months%
      
      Defense Electronics           21.8      Specialty Appar. Retailers    82.7
      Computer Software             15.4      Airlines                      67.3
      Semiconductors                14.0      Manufactured Housing          62.5
      Drug Chains                   13.6      Drug Chains                   61.7
      Specialty Appar. Retailers    13.4      Broadcasting                  58.0
      
      WORST-PERFORMING              Last                                  Last 12
      GROUPS                       month%                                 months%
      
      Oil & Gas Drilling           -10.4      Engineering & Constr.        -43.5
      Pollution Control             -7.8      Shoes                        -36.4
      Health-Care Services          -6.5      Metals                       -35.2
      Tobacco                       -5.8      Gold Mining                  -28.4
      Invest. Banking/Brkrge.       -4.7      Photography/Imaging          -23.1
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                       1-month
      significant buying on price weakness    Price           change
      
      Citicorp                                117 5/8        -8 1/4
      Telebras-ADR                            107 1/2        -7
      Wells Fargo                             295 7/16      -32 13/16
      Chase Manhattan                         105 1/4        -3 7/16
      IBM                                      96 1/2        -6 1/4
      Coca-Cola                                63 1/4        -3 1/16
      
      Decline ahead?  Stocks with most                        1-month
      significant selling on price strength     Price         change
      
      Intel                                    79 3/16        8 3/8
      Cisco Systems                            59 1/4         3 1/4
      Microsoft                               145 3/16       18 7/8
      Applied Materials                        30 13/16       1 1/4
      WorldCom                                 33 11/16       2 1/2
      Qualcomm                                 52 1/2         1 1/2
      
                                             Latest    Week    Year
      KEY RATES                              week%     ago%    ago%
      
      MONEY MARKET FUNDS                      5.19     5.21    4.95
      90-DAY TREASURY BILLS                   5.21     5.13    5.18
      6-MONTH BANK CDS                        5.12     5.14    5.03
      1-YEAR TREASURY BILLS                   5.31     5.22    5.61
      10-YEAR TREASURY NOTES                  5.69     5.54    6.63
      30-YEAR TREASURY BONDS                  5.94     5.81    6.90
      LONG-TERM AA INDUSTRIALS                6.60     6.44    7.39
      LONG-TERM BBB INDUSTRIALS               7.01     6.83    7.82
      LONG-TERM AA TELEPHONES                 6.96     6.77    7.61
      
      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     4.37%   4.26%    4.95%     4.84%
      PERCENT OF TREASURIES  76.84   76.96    83.35     83.31
      TAXABLE EQUIVALENT      6.33    6.17     7.17      7.01
      INSURED REVENUE BONDS   4.49    4.38     5.17      5.05
      PERCENT OF TREASURIES  78.95   79.13    87.06     86.93
      TAXABLE EQUIVALENT      6.51    6.35     7.49      7.32
      
      EQUITY FUNDS
      Leaders                                  Laggards
      Four-week total return           %       Four-week total return            %
      
      DFA Japanese Small Co.          33.5     Guinness Flgt. Asia Sm. Cap    -23.5
      Matthews Korea                  31.3     U.S. Global Inv. China Reg.    -22.0
      Japan                           13.1     Colonial Newport Gr. China  A  -21.6
      Barr Rosenberg Japan Instl.     11.9     Montgomery Emerg. Asia R       -20.8
      GMO Japan III                   11.6     Lex. Crosby Sm. Cap Asia       -19.1
      
      Leaders                                  Laggards
      52-week total return             %       52-week total return             %
      
      Smith Barney Telecom. Inc.      53.0     Bull & Bear Gold Investors     -58.9
      FBR Small Cap Financial         50.8     Midas                          -56.7
      Pilgrim Amer. Bank & Thr. A     50.3     Merrill Emerging Tigers C      -56.5
      Gabelli Value                   47.6     Morgan Stan. Instl. Gold A     -56.2
      Evergreen U.S. Real Est. Eq. Y  47.6     Lex. Crosby Sm. Cap Asia       -55.2
      
      EQUITY FUND CATEGORIES
      Leaders                                  Laggards
      Four-week total return            %      Four-week total return         %
      
      Japan                            9.4     Pacific/Asia ex-Japan        -11.7
      Precious Metals                  3.5     Latin America                -10.6
      Europe                           1.8     Diversified Emerging Mkts.    -8.3
      Communications                   1.8     Natural Resources             -4.2
      Foreign                          1.8     Financial                     -3.8
      
      Leaders                                  Laggards
      52-week total return             %       52-week total return            %
      
      Financial                       35.5     Pacific/Asia ex-Japan        -43.4
      Communications                  27.1     Precious Metals              -38.5
      Large-cap Blend                 24.0     Diversified Pacific/Asia     -26.9
      Utilities                       23.1     Diversified Emerging Mkts.   -18.4
      Large-cap Value                 22.3     Natural Resources             -5.6
      
      All data are as of market close Wednesday, Jan. 28, 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. 27. 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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