COMMENTARY

A seesaw week in the financial markets. The Standard & Poor's 500-stock index climbed to a new high on Jan. 29 and the NASDAQ Composite rose to a record on Feb. 1, with strong economic reports giving stocks a kick. Bonds, however, were hurt by the evidence of continued economic strength and sustained their biggest drop on Feb 1. Stocks declined on Feb. 2, led by computer stocks such as Microsoft Corp. and Intel Corp. But the stock market soared on Feb. 3, after the Federal Reserve left the federal funds rate unchanged.

STOCKS

                                                   % change
      U.S. MARKETS                       Latest       Week       Year
      Dow Jones Industrials              9366.8       1.8        15.2
      NASDAQ Combined Composite          2493.4       3.6        48.4
      S&P MidCap 400                      378.9       1.1        12.3
      S&P SmallCap 600                    172.7       0.3        -5.8
      S&P SuperComposite 1500             267.2       2.2        23.8
                                                          % change
      SECTORS                             Latest      Week       Year
      Bloomberg Information Age           536.4       3.6        67.5
      S&P Financials                      129.8       2.0         8.9
      S&P Utilities                       242.2      -2.6         7.0
      PSE Technology                      512.2       3.7        62.1
                                                          % change
      FOREIGN MARKETS                    Latest      Week         Year
      London (FT-SE 100)                 5940.3       1.1         6.2
      Frankfurt (DAX)                    5085.7       0.5        13.3
      Tokyo (NIKKEI 225)               14,161.3      -2.0       -16.1
      Hong Kong (Hang Seng)              9419.9      -3.1        -8.6
      Toronto (TSE 300)                  6721.5       1.0        -0.6
      Mexico City (IPC)                  4060.6       6.4       -15.2
                                                     Week        Year
      FUNDAMENTALS                         Latest    ago         ago
      S&P 500 Dividend Yield               1.25%     1.26%       1.53%
      S&P 500 P/E Ratio (Last 12 mos.)     33.6      32.6        25.6
      S&P 500 P/E Ratio (Next 12 mos.)*    24.1      24.3        19.7
      First Call Earnings Surprise*        4.04%     4.44%       2.23%
                                                     Week
      TECHNICAL INDICATORS               Latest      ago         Reading
      S&P 500 200-day average            1120.2    1116.4        Positive
      Stocks above 200-day average         34.0%     35.0%       Positive
      Options: Put/call ratio              0.45      0.46        Negative
      Insiders: Vickers Sell/buy ratio     1.39      1.43        Positive
      Data: Bloomberg Financial Markets; *First Call Corp.
      
      BEST-PERFORMING               Last                               Last 12
      GROUPS                        month%                              months%
      Semiconductors                25.0      Communications Equip.       115.5
      Broadcasting                  19.2      Specialty Appar. Retailers  104.8
      Shoes                         19.1      Computer Systems             96.5
      Specialty Appar. Retailers    18.1      Broadcasting                 82.7
      Invest. Banking/Brkrge.       17.8      Genl. Merchandise Chains     81.1
      WORST-PERFORMING              Last                               Last 12
      GROUPS                        month%                              months%
      Hospital Management          -23.1      Oil & Gas Drilling          -51.6
      Engineering & Constr.        -14.1      Metals                      -36.6
      Tobacco                      -12.7      Leisure Time                -36.4
      Specialty Printing           -11.9      Oil Exploration & Prod.     -35.1
      Property-Casual. Insurers    -11.6      Hospital Management         -33.3
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                       1-month
      significant buying on price weakness    Price          change
      IBM                                     176 3/4        -6 1/4
      Lucent Technologies                     110            -4 3/16
      Telebras-ADR                             73 3/4        -1 1/2
      Exxon                                    68 11/16      -3 15/16
      American Express                         99 11/16      -1 13/16
      Procter & Gamble                         89 13/16       - 3/16
      Decline ahead?  Stocks with most                       1-month
      significant selling on price strength   Price          change
      Microsoft                               167 5/8        26 5/8
      Cisco Systems                           112 25/64      17 5/64
      Intel                                   134 5/8        13 13/16
      MCI WorldCom                             78 15/16       9 1/16
      Dell Computer                           108 5/8        34 7/16
      Sun Microsystems                        106 1/16       16
      
      INTEREST RATES
                                   Latest   Week     Year
      KEY RATES                    week%    ago%     ago%
      MONEY MARKET FUNDS           4.63     4.66     5.18
      90-DAY TREASURY BILLS        4.48     4.46     5.08
      6-MONTH BANK CDS             4.36     4.36     5.10
      1-YEAR TREASURY BILLS        4.57     4.49     5.22
      10-YEAR TREASURY NOTES       4.84     4.67     5.55
      30-YEAR TREASURY BONDS       5.26     5.13     5.86
      LONG-TERM AA INDUSTRIALS     6.20     6.09     6.51
      LONG-TERM BBB INDUSTRIALS    6.94     6.75     6.97
      LONG-TERM AA TELEPHONES      6.43     6.35     6.89
      
      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          4.07%      4.08      4.84%      4.82%
      PERCENT OF TREASURIES       84.37      87.35     92.15      94.05
      TAXABLE EQUIVALENT           5.90       5.91      7.01       6.99
      INSURED REVENUE BONDS        4.23       4.23      5.10       5.09
      PERCENT OF TREASURIES       87.69      90.56     97.10      99.32
      TAXABLE EQUIVALENT           6.13       6.13      7.39       7.38
      
      MUTUAL FUNDS
      EQUITY FUNDS
      
      Leaders                              Laggards
      Four-week total return         %     Four-week total return               %
      Internet                    45.5     ProFunds UltraShort OTC Inv.     -18.3
      IAI Value                   37.4     Guinness Flgt. Mainld. China     -17.8
      Munder NetNet A             32.3     Fidelity Sel. Medical Delivery   -15.8
      IAI Emerging Growth         30.7     Invesco Latin Amer Gr.           -15.3
      Van Wagoner Post-Venture    24.9     Ivy South America A              -14.7
      Leaders                              Laggards
      52-week total return           %     52-week total return                 %
      Internet                   298.6     Lexington Troika Russia          -80.0
      ProFunds UltraOTC Inv.     192.2     American Heritage                -64.7
      Amerindo Technology D      151.4     Potomac OTC/Short                -55.6
      Grand Prix                 141.5     State St. Res. Glob. Res. C      -52.2
      Dreyfus Technology Growth  112.6     Offitbank Latin Amer. Sel.       -50.8
      EQUITY FUND CATEGORIES
      Leaders                              Laggards
      Four-week total return         %     Four-week total return               %
      Technology                   9.2     Latin America                     -8.4
      Communications               8.0     Natural Resources                 -5.3
      Japan                        5.5     Pacific/Asia ex-Japan             -4.9
      Large-cap Growth             4.2     Diversified Emerging Mkts.        -3.5
      Mid-cap Growth               2.9     Real Estate                       -3.1
      Leaders                              Laggards
      52-week total return           %     52-week total return                 %
      Technology                  58.2     Latin America                    -39.2
      Communications              54.1     Natural Resources                -26.0
      Large-cap Growth            37.5     Diversified Emerging Mkts.       -24.9
      Large-cap Blend             21.1     Real Estate                      -16.8
      Mid-cap Growth              20.1     Precious Metals                  -15.7
      
      All data are as of market close Wednesday, Feb. 3, 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 Feb. 2. 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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