COMMENTARY

The U.S. stock market began the new year with a bang. The Dow Jones industrial average climbed above 9500 for the first time, rising 234 to close at 9545 on Jan. 6. The rise was aided by a flow of cash into stocks from pension funds. The Standard & Poor's 500 and NASDAQ Composite also climbed to new records. The dollar surged, as signs of slower growth boosted the U.S. currency against the new euro. The yen fell against the dollar, reflecting speculation that Japan may sell yen to help exports.

STOCKS

Investment Figures of the Week

                                                    % change
      U.S. MARKETS                            Latest    Week      Year
      Dow Jones Industrials                   9545.0    2.4       20.8
      NASDAQ Combined Composite               2320.9    6.4       48.6
      S&P MidCap 400                           395.1    5.8       21.3
      S&P SmallCap 600                         178.5    4.0        0.3
      S&P SuperComposite 1500                  268.4    2.8       29.7
                                                          % change
      SECTORS                                 Latest    Week      Year
      Bloomberg Information Age                498.3    4.8       69.8
      S&P Financials                           135.6    2.7       16.8
      S&P Utilities                            260.4    0.3       14.1
      PSE Technology                           475.3    6.7       63.5
                                                          % change
      FOREIGN MARKETS                         Latest    Week      Year
      London (FT-SE 10)                       6148.8    3.5       17.7
      Frankfurt (DAX)                         5443.6    8.2       24.0
      Tokyo (NIKKEI 225)                    13,468.5    -2.7     -10.4
      Hong Kong (Hang Seng)                 10,233.8    0.1        7.3
      Toronto (TSE 300)                       6805.3    5.1        3.3
      Mexico City (IPC)                       3745.2   -4.4      -24.2
                                                          % change
      FUNDAMENTALS                            Latest    Week      Year
      S&P 500 Dividend Yield                  1.27%    1.28%      1.59%
      S&P 500 P/E Ratio (Last 12 mos.)        32.6     31.9       24.6
      S&P 500 P/E Ratio (Next 12 mos.)*       24.2     24.0       19.0
      First Call Earnings Surprise*           9.99%    0.60%     -4.70%
                                                          % change
      TECHNICAL INDICATORS                    Latest    Week      Year
      S&P 500 200-day average                1106.5  1102.8       Positive
      Stocks above 200-day average             41.0%   37.0%      Neutral
      Options: Put/call ratio                  0.45    0.44       Negative
      Insiders: Vickers Sell/buy ratio         1.25    1.14       Positive
      
      BEST-PERFORMING             Last                                   Last 12
      GROUPS                      month%                                 months%
      Health-Care Services         26.7     Communications Equip.        23.7
      Communications Equip.       124.2     Genl. Merchandise Chains     84.7
      Long-Dist. Telecomms.        25.6     Computer Systems             82.8
      Specialty Appar. Retailers  115.0     Specialty Appar. Retailers   22.6
      Transportation Services      25.5     Computer Software            75.6
      WORST-PERFORMING            Last                                  Last 12
      GROUPS                      month%                                months%
      Toys                        -17.2     Oil & Gas Drilling          -49.2
      Hospital Management         - 8.5     Oil-Well Equip. & Svcs.     -30.2
      Housewares                  - 4.9     Metals                      -24.8
      Property-Casual. Insurers   - 3.9     Leisure Time                -24.3
      Tobacco                     - 3.8     Toys                        -24.0
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                               1-month
      significant buying on price weakness              Price        change
      Exxon                                             72           -1
      Mobil                                             85 15/16     -1 7/16
      BankAmerica                                       61 5/16      -2 1/8
      Merck                                             150 3/4      -6 15/16
      Chevron                                           80 7/8       -1 5/16
      Telebras-ADR                                      77 1/4      -11 1/2
      Decline ahead?  Stocks with most                               1-month
      significant selling on price strength             Price        change
      Cisco Systems                                     96 15/16     16 3/4
      Microsoft                                        146 1/2       12 15/16
      MCI WorldCom                                      74 15/16     11 1/4
      Dell Computer                                     75 1/4        7 5/8
      Sun Microsystems                                  92 9/16      14 3/4
      Intel                                            123 1/4        4 5/16
      INTEREST RATES
                                    Latest   Week      Year
      KEY RATES                     week%    ago%      ago%
      MONEY MARKET FUNDS            4.75      4.75      5.25
      90-DAY TREASURY BILLS         4.44      4.57      5.23
      6-MONTH BANK CDS              4.39      4.38      5.20
      1-YEAR TREASURY BILLS         4.51      4.61      5.31
      10-YEAR TREASURY NOTES        4.71      4.68      5.55
      30-YEAR TREASURY BONDS        5.16      5.10      5.80
      LONG-TERM AA INDUSTRIALS      6.13      6.11      6.41
      LONG-TERM BBB INDUSTRIALS     6.97      6.94      6.74
      LONG-TERM AA TELEPHONES       6.43      6.46      6.74
      BLOOMBERG MUNI YIELD EQUIVALENTS
      Taxable equivalent yields on AAA-rated, tax-exempt municipal bonds,
      assuming a 31% federal tax rate.
      GENERAL OBLIGATIONS      4.16%      4.15%      4.88%       4.87%
      PERCENT OF TREASURIES   88.37      88.65      94.54       95.38
      TAXABLE EQUIVALENT       6.03       6.01       7.07        7.06
      INSURED REVENUE BONDS    4.29       4.30       5.12        5.13
      PERCENT OF TREASURIES   91.14      91.85      99.19      100.47
      TAXABLE EQUIVALENT       6.22       6.23       7.42        7.43
      
      MUTUAL FUNDS
      EQUITY FUNDS
      Leaders                                 Laggards
      Four-week total return         %        Four-week total return        %
      Millennium Growth              39.2     ProFunds UltraShort OTC Inv. -23.8
      ProFunds UltraOTC Investor     280      American Heritage            -22.2
      Matthews Korea I               27.0     Potomac OTC/Short            -12.1
      Amerindo Technology D          24.0     Montgomery Latin Amer. R     -12.0
      WM Growth S                    21.6     ProFunds UltraBear Inv.      -9.9
      Leaders                                 Laggards
      52-week total return           %        52-week total return          %
      Internet                      202.0     Lexington Troika Russia      -83.3
      ProFunds UltraOTC Investor    191.3     American Heritage            -63.2
      Matthews Korea I              109.5     Potomac OTC/ShOrt            -54.2
      Potomac OTC Plus              107.9     Montgomery Latin Amer. R     -53.4
      Dreyfus Technology Growth      99.1     Excelsior Latin America      -48.1
      EQUITY FUND CATEGORIES
      Leaders                                 Laggards
      Four-week total return          %       Four-week total return        %
      Communications                 12.4     Latin America                -3.1
      Technology                     11.3     Japan                         0.1
      Europe                          9.9     Real Estate                   0.9
      Mid-cap Growth                  8.8     Pacific/Asia ex-Japan         1.1
      Large-cap Growth                8.4     Natural Resources             1.6
      Leaders                                 Laggards
      52-week total return            %       52-week total return          %
      Technology                     48.2     Latin America                -39.8
      Communications                 46.5     Diversified Emerging Mkts.   -25.3
      Large-cap Growth               35.9     Natural Resources            -22.4
      Large-cap Blend                22.5     Real Estate                  -14.8
      Europe                         21.3     Precious Metals              - 8.1
      
      All data are as of market close Wednesday, Jan. 6, 1999, 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. 5. 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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