COMMENTARY

A stupendous week in the markets.The Dow Jones industrials surged almost 200

points, or 2.3%, wiping out the old mark set back in August, while the Standard

& Poor's 500 stock index jumped 1.3%. Investors were euphoric over the

fourth-quarter productivity gain, announced on Feb. 10, which came in at

2.0%--more than twice the expected rise. America Online was the big winner, up

14 points for the week, to 114 3/16, on higher-than-expected earnings and an

increase in usage prices. To top it off, bonds rallied sharply on Feb. 11.

      
                                                  % change
      U.S. MARKETS                  Latest      Week       Year
      Dow Jones Industrials         8314.6      2.3        19.4
      NASDAQ Combined Composite     1708.6      1.7        25.7
      S&P MidCap 400                 342.6      1.6        28.9
      S&P SmallCap 600               188.3      2.7        29.0
      S&P SuperComposite 1500        218.9      1.4        27.3
      
                                                  % change
      SECTORS                       Latest     Week        Year
      Bloomberg Information Age      321.4      0.4        28.8
      S&P Financials                 121.9      2.3        31.8
      S&P Utilities                  229.2      1.2        14.6
      PSE Technology                 325.7      3.1        24.0
      
                                                   % change
      FOREIGN MARKETS               Latest     Week         Year
      London (FT-SE 100)            5607.9      0.2         30.3
      Frankfurt (DAX)               4588.4      2.3         42.7
      Tokyo (NIKKEI 225)          17,205.1      1.9         -6.5
      Hong Kong (Hang Seng)       10,793.4      4.8        -19.8
      Toronto (TSE 300)             6944.8      2.7         12.6
      Mexico City (IPC)             4729.3     -1.2         24.4
      
                                                           Week       Year
      FUNDAMENTALS                           Latest         ago        ago
      S&P 500 Dividend Yield                  1.49 %       1.53 %     1.84 %
      S&P 500 P/E Ratio (Last 12 mos.)        25.8         25.6       20.6
      S&P 500 P/E Ratio (Next 12 mos.)*       20.0         19.7       16.7
      First Call Earnings Revision*          -9.21 %      -9.35 %    -0.41 %
      
                                                        Week
      TECHNICAL INDICATORS                  Latest      ago      Reading
      S&P 500 200-day average                925.0     919.0     Positive
      Stocks above 200-day average            67.0 %    63.0 %   Neutral
      Options: Put/call ratio                 0.51      0.49     Negative
      Insiders: Vickers Sell/buy ratio        1.59      1.55     Positive
      
      BEST-PERFORMING       Last                                     Last 12
      GROUPS                month%                                   months%
      Defense Electronics    32.1        Airlines                      78.2
      Medical Products       21.0        Specialty Appar. Retailers    77.4
      Semiconductors         19.9        Manufactured Housing          71.6
      Computer Software      19.4        Homebuilding                  70.2
      Machine Tools          19.0        Broadcasting                  66.4
      
      WORST-PERFORMING      Last                                      Last 12
      GROUPS                month%                                    months%
      Tobacco                -6.3        Shoes                        -40.5
      Pollution Control      -4.7        Engineering & Constr.        -40.3
      Hospital Management    -1.7        Metals                       -33.7
      Electric Companies     -0.6        Gold Mining                  -29.2
      Specialty Printing      1.2        Photography/Imaging          -23.9
      
                           BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                            1-month
      significant buying on price weakness    Price               change
      AT&T                                     62 3/16            -3/16
      Gillette                                100 13/16           -9/16
      Dow Chemical                             92 1/2             -1 3/4
      Electronic Data Systems                  42 3/16            -7/8
      Ciena                                    54 1/4             -3 7/16
      UAL                                      88 11/16           -1 5/16
      
      Decline ahead?  Stocks with most                            1-month
      significant selling on price strength   Price               change
      Microsoft                               159 1/4             29 3/4
      Intel                                    86 1/4             10 5/8
      Cisco Systems                            64 3/4              9 1/16
      Oracle                                   27 1/4              9 3/16
      Applied Materials                        36                  7 15/16
      WorldCom                                 37                  7 1/2
      
      Data: Bloomberg Financial Markets; *First Call Corp.
      
                                   Latest      Week     Year
      KEY RATES                     week%      ago%     ago%
      MONEY MARKET FUNDS            5.16       5.18     4.95
      90-DAY TREASURY BILLS         5.20       5.11     5.14
      6-MONTH BANK CDS              5.10       5.10     5.03
      1-YEAR TREASURY BILLS         5.27       5.24     5.52
      10-YEAR TREASURY NOTES        5.56       5.57     6.43
      30-YEAR TREASURY BONDS        5.84       5.87     6.71
      LONG-TERM AA INDUSTRIALS      6.50       6.51     7.15
      LONG-TERM BBB INDUSTRIALS     6.96       6.97     7.50
      LONG-TERM AA TELEPHONES       6.76       6.89     7.39
      
                  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        4.33%   4.33%     4.91%    4.91%
      PERCENT OF TREASURIES     77.75   77.95     84.01    83.73
      TAXABLE EQUIVALENT         6.28    6.28      7.12     7.12
      INSURED REVENUE BONDS      4.44    4.46      5.11     5.13
      PERCENT OF TREASURIES     79.73   80.29     87.43    87.48
      TAXABLE EQUIVALENT         6.43    6.46      7.41     7.43
      
      EQUITY FUNDS
      Leaders                                  Laggards
      Four-week total return            %      Four-week total return       %
      DFA Japanese Small Co.          50.7     Prudent Bear               -13.5
      Matthews Pacific Tiger          36.5     American Heritage          -13.2
      Colonial Newport Gr. China  A   36.2     Frontier Equity            -10.4
      DFA Pacific Rim Small Co.       35.4     Comstock Part. Cap. Val. C  -8.2
      Montgomery Emerg. Asia R        33.6     Lexington Troika Russia     -8.2
      
      Leaders                                  Laggards
      52-week total return             %       52-week total return         %
      Munder Micro-Cap Eq. Y          63.5     Midas                      -54.6
      Delaware Aggressive Gr. A       55.9     U.S. Global Investors Gold -54.5
      Transamerica Equity Investor    53.8     Bull & Bear Gold Investors -54.0
      Fidelity Sel. Air Trans.        53.3     Matthews Korea             -51.1
      Brazos/JMIC Small Cap Gr.       51.7     Invesco Strategic Gold     -50.8
      
      EQUITY FUND CATEGORIES
      Leaders                                  Laggards
      Four-week total return           %       Four-week total return        %
      Pacific/Asia ex-Japan           21.9     Real Estate                  1.6
      Precious Metals                 16.1     Utilities                    2.1
      Diversified Pacific/Asia        15.2     International Hybrid         3.1
      Japan                           13.7     Domestic Hybrid              4.0
      Technology                      11.6     Latin America                4.5
      
      Leaders                                  Laggards
      52-week total return             %       52-week total return         %
      Financial                       37.9     Pacific/Asia ex-Japan      -35.7
      Communications                  32.4     Precious Metals            -35.6
      Unaligned                       28.8     Diversified Pacific/Asia   -23.4
      Small-cap Value                 28.2     Diversified Emerging Mkts. -13.8
      Large-cap Growth                28.1     Japan                       -4.1
      
      All data are as of market close Wednesday, Feb. 11, 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 Feb. 10. 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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