COMMENTARY

Hold on to your hats! Concerns that Asia's economic crisis would hurt the

earnings of U.S. companies sent the Dow Jones industrial average plunging

150.7 points, or 1.6%, on May 26. That was the Dow's worst fall since Jan. 9.

After dropping as much as 175 points the next day, the market recovered to

close down just 27.2 points, at 8936.6. Big losers were Citicorp and Bankers

Trust. The bond market was also active: A flight to quality drove the yield on

the 30-year Treasury bond to 5.84%, down from 5.94% a week ago.

      
                                                    % change
      U.S. MARKETS                  Latest      Week       Year
      Dow Jones Industrials         8936.6      -2.6       21.5
      NASDAQ Combined Composite     1781.1      -2.8       26.3
      S&P MidCap 400                 354.9      -3.3       28.0
      S&P SmallCap 600               188.4      -3.7       22.5
      S&P SuperComposite 1500        233.0      -2.5       28.6
      
                                                  % change
      SECTORS                        Latest     Week     Year
      Bloomberg Information Age      335.0      -2.3     25.2
      S&P Financials                 131.2      -3.4     40.5
      S&P Utilities                  232.0      -1.6     21.0
      PSE Technology                 333.2      -4.3     16.2
      
                                              % change
      FOREIGN MARKETS           Latest     Week    Year
      London (FT-SE 100)        5870.2    -0.6       25.5
      Frankfurt (DAX)           5490.6    -0.4       51.0
      Tokyo (NIKKEI 225)      15,664.3     0.1      -23.0
      Hong Kong (Hang Seng)     8983.4    -5.9      -38.3
      Toronto (TSE 300)         7542.9    -2.0       18.1
      Mexico City (IPC)         4480.4    -2.8       14.7
      
                                                        Week      Year
      FUNDAMENTALS                         Latest       ago        ago
      S&P 500 Dividend Yield                1.42 %      1.41 %     1.75 %
      S&P 500 P/E Ratio (Last 12 mos.)      26.0        26.4       21.4
      S&P 500 P/E Ratio (Next 12 mos.)*     21.3        21.6       17.6
      First Call Earnings Revision*        -0.63 %     -1.20 %    -0.73 %
      
                                                       Week
      TECHNICAL INDICATORS                Latest        ago       Reading
      S&P 500 200-day average             999.7        996.6      Positive
      Stocks above 200-day average         50.0 %       55.0 %    Neutral
      Options: Put/call ratio              0.60         0.59      Neutral
      Insiders: Vickers Sell/buy ratio     2.71         2.71      Negative
      
      BEST-PERFORMING              Last                                Last 12
      GROUPS                       month%                              months%
      Automobiles                   17.2    Specialty Appar. Retailers  100.4
      Specialty Appar. Retailers    12.3    Broadcasting                 83.3
      Restaurants                    9.5    Automobiles                  71.3
      Genl. Merchandise Chains       9.0    Personal Loans               69.3
      Department Stores              7.9    Genl. Merchandise Chains     66.0
      
      WORST-PERFORMING             Last                                Last 12
      GROUPS                       month%                              months%
      Gold Mining                  -14.8    Metals                      -41.3
      Oil & Gas Drilling           -12.0    Gold Mining                 -28.9
      Metals                       -11.0    Shoes                       -22.4
      Oil Exploration & Prod.       -9.4    Photography/Imaging         -18.9
      Manufactured Housing          -8.9    Engineering & Constr.       -18.2
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                            1-month
      significant buying on price weakness    Price               change
      Intel                                    74 11/16            -5 5/16
      Hewlett-Packard                          65 3/8              -7 7/8
      Mellon Bank                              67                  -4 5/16
      Gateway 2000                             44 1/2             -13 3/16
      AT&T                                     59 11/16            - 13/16
      Xilinx                                   42                  -4 11/16
      
      Decline ahead?  Stocks with most                            1-month
      significant selling on price strength   Price               change
      Dell Computer                            83 15/16             9 5/8
      WorldCom                                 45 3/4               2 3/8
      Cisco Systems                            76                   5 9/16
      Washington Mutual                        72 3/4               3 5/16
      Abbott Laboratories                      74 7/8               3 1/2
      Travelers Group                          62 3/4               1 1/2
      
      Data: Bloomberg Financial Markets; *First Call Corp.
      
                                   Latest     Week        Year
      KEY RATES                    week%      ago%        ago%
      MONEY MARKET FUNDS           5.10       5.10        5.14
      90-DAY TREASURY BILLS        5.08       5.23        5.18
      6-MONTH BANK CDS             5.08       5.08        5.23
      1-YEAR TREASURY BILLS        5.41       5.45        5.91
      10-YEAR TREASURY NOTES       5.58       5.65        6.80
      30-YEAR TREASURY BONDS       5.84       5.94        7.03
      LONG-TERM AA INDUSTRIALS     6.41       6.51        7.56
      LONG-TERM BBB INDUSTRIALS    6.85       6.93        7.93
      LONG-TERM AA TELEPHONES      6.69       6.77        7.78
      
      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         4.45%    4.46%    4.98%    5.03%
      PERCENT OF TREASURIES      79.88    79.47    85.28    85.30
      TAXABLE EQUIVALENT          6.45     6.46     7.22     7.29
      INSURED REVENUE BONDS       4.57     4.58     5.17     5.19
      PERCENT OF TREASURIES      82.03    81.60    88.53    88.01
      TAXABLE EQUIVALENT          6.62     6.64     7.49     7.52
      
      EQUITY FUNDS
      
      Leaders                             Laggards
      Four-week total return        %     Four-week total return           %
      IAI Value                    28.1   Lexington Troika Russia       -33.6
      Fidelity Germany             10.5   Matthews Korea I              -19.0
      Waddell & Reed Intl. Gr. B    9.4   Govett Latin America A        -16.6
      Smith Barney European A       9.2   Fidelity Latin America        -15.3
      IAI Balanced                  8.9   Excelsior Latin America       -14.9
      
      Leaders                             Laggards
      52-week total return           %    52-week total return            %
      FMI Focus                    69.7   Matthews Korea I              -65.0
      Munder Micro-Cap Equity Y    66.4   U.S. Global Investors Gold    -57.6
      Weitz Hickory                64.9   Lex. Crosby Sm. Cap Asia      -56.2
      Fidelity Select Brokerage    62.1   Morg. Stan. Inst. Asia Eq. A  -54.5
      IAI Value                    61.4   Morgan Stan. Asian Grth. C    -54.5
      
      EQUITY FUND CATEGORIES
      
      Leaders                             Laggards
      Four-week total return         %    Four-week total return          %
      Europe                        5.4   Latin America                 -13.3
      Foreign                       3.4   Precious Metals               -10.6
      World                         1.7   Diversified Emerging Mkts.     -9.5
      International Hybrid          0.9   Pacific/Asia ex-Japan          -8.8
      Large-cap Value               0.7   Diversified Pacific/Asia       -5.6
      
      Leaders                             Laggards
      52-week total return          %     52-week total return            %
      Financial                    42.3   Pacific/Asia ex-Japan         -40.9
      Communications               39.4   Diversified Pacific/Asia      -33.5
      Europe                       35.4   Precious Metals               -32.8
      Large-cap Growth             29.3   Japan                         -22.2
      Large-cap Blend              27.8   Diversified Emerging Mkts.    -19.3
      
      All data are as of market close Wednesday, May 27, 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 May 26. For a more detailed explanation, write to us or E-mail 
      figures@businessweek.com.  NA=Not available  **Vanguard Index 500 Fund
      Data: Morningstar, Inc.
      
      
      
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