STOCKS

COMMENTARY

The U.S. markets staged a comeback, with six straight days of gains. The big

activity was on Oct. 15, when the Federal Reserve's quarter-point cut in

overnight lending rates sent stocks climbing. The Dow Jones industrial average

surged 331 points on that day, and the S&P 500 and NASDAQ Composite were also

strong gainers. The dollar fell to 114 yen on Oct. 19, but rose on Oct. 20 and

21 because of skepticism over whether Japan will bail out its ailing banks.

The dollar gained against the mark as well.

      
                                                                     % change
      U.S. MARKETS                                      Latest    Week      Year
      Dow Jones Industrials                             8519.2    6.9       6.0
      NASDAQ Combined Composite                         1674.8    8.7      -2.0
      S&P MidCap 400                                    316.8     8.0      -6.3
      S&P SmallCap 600                                  151.9     12.4     -19.8
      S&P SuperComposite 1500                           224.8     6.7       7.5
      
                                                                     % change
      SECTORS                                           Latest    Week      Year
      Bloomberg Information Age                         361.5     6.7       19.8
      S&P Financials                                    116.7     11.1      0.5
      S&P Utilities                                     250.8    -3.2       18.8
      PSE Technology                                    331.2     8.8      -0.5
      
                                                                     % change
      FOREIGN MARKETS                                   Latest    Week     Year
      London (FT-SE 100)                                5206.6    3.3      1.1
      Frankfurt (DAX)                                   4523.2    4.7      8.4
      Tokyo (NIKKEI 225)                                14,216.3  8.8     -19.6
      Hong Kong (Hang Seng)                             9662.1    9.3     -17.0
      Toronto (TSE 300)                                 5848.4    4.5     -18.4
      Mexico City (IPC)                                 3850.5    7.1     -27.3
      
                                                                  Week      Year
      FUNDAMENTALS                                      Latest    ago        ago
      S&P 500 Dividend Yield                            1.49%     1.60%     1.56%
      S&P 500 P/E Ratio (Last 12 mos.)                  26.7      24.0      24.3
      S&P 500 P/E Ratio (Next 12 mos.)*                 20.7      19.3      19.2
      First Call Earnings Surprise*                     1.36%     5.04%     2.42%
      
                                                                  Week
      TECHNICAL INDICATORS                              Latest    ago      Reading
      S&P 500 200-day average                           1069.6    1067.6   Positive
      Stocks above 200-day average                      23.0%     17.0%    Positive
      Options: Put/call ratio                           0.54      0.80     Negative
      Insiders: Vickers Sell/buy ratio                  0.46      0.47     Positive
      
      BEST-PERFORMING           Last                                   Last 12
      GROUPS                    month%                                 months%
      Household Products        22.8          Drug Chains                66.9
      Machine Tools             22.3          Genl. Merchandise Chains   59.2
      Paper Containers          21.5          Specialty Appar. Retailers 47.5
      Cosmetics                 21.4          Broadcasting               40.8
      Steel                     19.9          Drugs                      38.6
      
      WORST-PERFORMING          Last                                    Last 12
      GROUPS                    month%                                  months%
      Health-Care Services     -12.2          Oil & Gas Drilling        -60.7
      Photography/Imaging      -10.3          Metals                    -44.8
      Hospital Management      -9.0           Oil-Well Equip. & Svcs.   -40.3
      HMOs                     -8.5           Leisure Time              -39.6
      Personal Loans           -6.7           Machine Tools             -36.2
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                              1-month
      significant buying on price weakness              Price       change
      
      Intel                                             84 9/16      -1/16
      Merck                                             130 5/8      -5
      Citicorp                                          79 13/16     -16 13/16
      Pfizer                                            96 11/16     -1 1/8
      Eli Lilly                                         75 3/8       -15/16
      Amgen                                             74 1/16      -1 3/16
      
      Decline ahead?  Stocks with most                                1-month
      significant selling on price strength             Price         change
      MCI WorldCom                                      50 15/16      3 5/16
      Tellabs                                           46 5/8        2 9/16
      Washington Mutual                                 41 1/4        5 1/2
      Ciena                                             12 13/16      1 13/16
      CMG Information Services                          47            2 1/4
      L.M. Ericsson-ADR                                 21 3/8        1 9/16
      
      INTEREST RATES
      
                                                        Latest    Week      Year
      KEY RATES                                         week%     ago%      ago%
      MONEY MARKET FUNDS                                4.93      4.97      5.13
      90-DAY TREASURY BILLS                             3.96      4.02      5.16
      6-MONTH BANK CDS                                  4.57      4.64      5.19
      1-YEAR TREASURY BILLS                             4.03      4.19      5.58
      10-YEAR TREASURY NOTES                            4.57      4.58      6.12
      30-YEAR TREASURY BONDS                            5.07      5.00      6.41
      LONG-TERM AA INDUSTRIALS                          6.28      6.27      6.89
      LONG-TERM BBB INDUSTRIALS                         7.05      6.94      7.26
      LONG-TERM AA TELEPHONES                           6.67      6.75      7.22
      
      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             4.04%     4.02%     4.73%     4.71%
      PERCENT OF TREASURIES           88.43     87.26     93.29     93.64
      TAXABLE EQUIVALENT              5.86      5.83      6.86      6.83
      INSURED REVENUE BONDS           4.18      4.17      4.96      4.94
      PERCENT OF TREASURIES           91.50     90.52     97.82     98.22
      TAXABLE EQUIVALENT              6.06      6.04      7.19      7.16
      
      MUTUAL FUNDS
      
      EQUITY FUNDS
      
      Leaders                                 Laggards
      Four-week total return        %         Four-week total return        %
      Matthews Korea A            37.8        American Heritage          -22.0
      Newport Tiger T             33.7        PBHG Select Equity         -14.8
      Wright EquiFd.-Hong Kong    32.7        OVB Emerging Growth A      -13.2
      Newport Tiger Cub B         31.6        ProFunds UltraOTC Investor -11.0
      Newport Greater China A     29.8        PBHG Tech. & Communs.      -10.8
      
      Leaders                                 Laggards
      52-week total return          %         52-week total return          %
      Smith Barney Telecomm. Inc. 42.3        Lexington Troika Russia    -88.2
      Berger Balanced             41.6        Frontier Equity            -66.4
      Sequoia                     33.6        American Heritage          -64.2
      Icon Telecomm. & Utilities  30.3        Vontobel Eastern Europ. Eq.-62.1
      Wright EquiFd.-Belg./Lux.   29.2        Dreyfus Aggressive Growth  -60.9
      
      EQUITY FUND CATEGORIES
      
      Leaders                                 Laggards
      Four-week total return        %         Four-week total return        %
      Pacific/Asia ex-Japan       18.0        Small-cap Growth           -4.0
      Diversified Pacific/Asia    12.4        Real Estate                -3.8
      Precious Metals             10.1        Small-cap Blend            -2.9
      Japan                       8.7         Health                     -2.9
      Latin America               7.8         Technology                 -2.9
      
      Leaders                                 Laggards
      52-week total return          %         52-week total return          %
      Utilities                   15.8        Latin America              -48.1
      Large-cap Growth            6.4         Diversified Emerging Mkts. -43.7
      Large-cap Blend             6.0         Pacific/Asia ex-Japan      -36.7
      Communications              5.7         Precious Metals            -33.5
      Domestic Hybrid             4.0         Natural Resources          -32.1
      
      All data are as of market close Wednesday, Oct. 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 Oct. 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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