COMMENTARY

Falling bond prices gave equity investors a tough week. The yield on the 30-year U.S. Treasury bond rose to 5.36%, the highest level in five months. That put selling pressure on stocks. The Dow industrials lost about 2%, the S&P 500 dropped 3.8%, and both are now slightly below their 1998 closing prices. The tech-driven NASDAQ Composite gave up 7.4% over the week, but still has better than a 5% gain for the year. Internet stocks took big hits: Yahoo! fell 20.5%, Amazon.com, 22.5%, and eBay, 23.8%.

STOCKS

                                                  % change
      U.S. MARKETS                       Latest      Week      Year
      Dow Jones Industrials            9177.3       -2.0       10.4
      NASDAQ Combined Composite        2309.5       -7.4       35.2
      S&P MidCap 400                    358.8       -5.3        4.7
      S&P SmallCap 600                  162.7       -5.8      -13.6
      S&P SuperComposite 1500           256.6       -4.0       17.2
                                                       % change
      SECTORS                             Latest    Week      Year
      Bloomberg Information Age         501.6       -6.5       56.1
      S&P Financials                    124.8       -3.9        2.3
      S&P Utilities                     240.9       -0.5        5.1
      PSE Technology                    469.8       -8.3       44.2
                                                       % change
      FOREIGN MARKETS                    Latest      Week      Year
      London (FT-SE 100)               5770.2       -2.9         2.9
      Frankfurt (DAX)                  4796.8       -5.7         4.5
      Tokyo (NIKKEI 225)             13,952.4       -1.5       -18.9
      Hong Kong (Hang Seng)            9076.3       -3.6       -15.9
      Toronto (TSE 300)                6400.7       -4.8        -7.8
      Mexico City (IPC)                3941.5       -2.9       -16.7
                                                     Week       Year
      FUNDAMENTALS                         Latest    ago        ago
      S&P 500 Dividend Yield               1.30%    1.25%       1.49%
      S&P 500 P/E Ratio (Last 12 mos.)     32.2     33.6        25.8
      S&P 500 P/E Ratio (Next 12 mos.)*    23.2     24.1        20.0
      First Call Earnings Revision*       -1.18%   -1.23%      -9.21%
                                                     Week
      TECHNICAL INDICATORS                Latest     ago         Reading
      S&P 500 200-day average             1123.2     1120.2      Positive
      Stocks above 200-day average          31.0%      34.0%     Positive
      Options: Put/call ratio                 NA       0.45            NA
      Insiders: Vickers Sell/buy ratio      1.35       1.39      Positive
      Data: Bloomberg Financial Markets; *First Call Corp.
      
      BEST-PERFORMING              Last                                 Last 12
      GROUPS                       month%                               months%
      Cosmetics                    16.4    Communications Equip.         88.3
      Shoes                        12.2    Specialty Appar. Retailers    85.9
      Toys                         11.6    Computer Systems              73.4
      Alcoholic Beverages           9.9    Genl. Merchandise Chains      64.9
      Housewares                    7.4    Long-Dist.Telecomms.          63.5
      WORST-PERFORMING            Last                                  Last 12
      GROUPS                      month%                                months%
      Tobacco                     -22.9    Oil & Gas Drilling           -57.4
      Hospital Management         -17.2    Oil Exploration & Prod.      -37.3
      Oil & Gas Drillling         -16.3    Leisure Time                 -35.6
      Metals                      -15.9    Hospital Management          -35.6
      Furnishings & Appliances    -15.5    Oil-Well Equip. & Svcs.      -34.8
      
      BLOOMBERG MONEY FLOW ANALYSIS
      Rebound ahead?  Stocks with most                           1-month
      significant buying on price weakness    Price              change
      America Online                          147 15/16       -17 3/16
      IBM                                     162 3/4         -26 1/2
      Vodafone Group-ADR                      171 1/4          -3 3/4
      Lucent Technologies                      96             -16 15/16
      Ascend Communications                    71 3/8          -5 5/16
      Micron Technology                        65 13/16        -1 7/16
      Decline ahead?  Stocks with most                            1-month
      significant selling on price strength   Price               change
      Microsoft                               160 1/16         12 9/16
      Dell Computer                            97 13/16        15 13/16
      MCI WorldCom                             76 3/4           1 3/4
      Sun Microsystems                         97 5/8           3 5/8
      Oracle                                   54 5/8           7 7/16
      Schering-Plough                          52 7/8            1/8
      
      INTEREST  RATES
                                     Latest     Week       Year
                                     week%      ago%       ago%
      MONEY MARKET FUNDS             4.60       4.63       5.16
      90-DAY TREASURY BILLS          4.47       4.48       5.18
      6-MONTH BANK CDS               4.33       4.36       5.09
      1-YEAR TREASURY BILLS          4.63       4.59       5.26
      10-YEAR TREASURY NOTES         4.93       4.83       5.48
      30-YEAR TREASURY BONDS         5.36       5.25       5.83
      LONG-TERM AA INDUSTRIALS       6.29       6.20       6.46
      LONG-TERM BBB INDUSTRIALS      6.98       6.94       6.91
      LONG-TERM AA TELEPHONES        6.57       6.43       6.74
      
      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        4.05%      4.07%        4.84%        4.84%
      PERCENT OF TREASURIES     82.14      84.37        90.15        92.15
      TAXABLE EQUIVALENT         5.87       5.90         7.01         7.01
      INSURED REVENUE BONDS      4.20       4.23         5.11         5.10
      PERCENT OF TREASURIES     85.19      87.69        95.18        97.10
      TAXABLE EQUIVALENT         6.09       6.13         7.41         7.39
      
      MUTUAL FUNDS
      EQUITY FUNDS
      Leaders                                 Laggards
      Four-week total return           %      Four-week total return            %
      IAI Value                      25.8     Montgomery Emerg. Asia R      -22.0
      BT Invmnt Latin Am. Eq.        18.7     Amerindo Technology D         -20.0
      IAI Emerging Growth            16.4     Apex Mid Cap Growth           -19.4
      Wright EquiFund-Mexico          9.9     Guinness Flight Main China    -18.2
      Warburg Adv. Japan Sm. Co.      7.9     State St. Res. Glob. Res. C   -17.2
      Leaders                                 Laggards
      52-week total return              %     52-week total return              %
      Internet                      253.8     Lexington Troika Russia       -80.0
      ProFunds UltraOTC Investor    140.8     American Heritage             -63.4
      Munder NetNet A               120.2     State St. Res. Glob. Res. C   -54.3
      Grand Prix                    119.9     Offitbank Latin Amer. Sel.    -53.3
      Amerindo Technology D         116.5     Excelsior Latin America       -52.0
      EQUITY FUND CATEGORIES
      Leaders                                 Laggards
      Four-week total return            %     Four-week total return            %
      Japan                           1.4     Pacific/Asia ex-Japan         -11.5
      Latin America                   0.3     Precious Metals                -6.7
      Communications                 -0.2     Natural Resources              -6.3
      Large-cap Growth               -0.7     Financial                      -5.9
      Health                         -1.0     Small-cap Blend                -5.3
      Leaders                                 Laggards
      52-week total return              %     52-week total return              %
      Technology                     46.7     Latin America                 -41.6
      Communications                 42.9     Diversified Emerging Mkts.    -28.5
      Large-cap Growth               29.0     Natural Resources             -26.1
      Large-cap Blend                15.6     Pacific/Asia ex-Japan         -18.5
      Utilities                      14.1     Precious Metals               -18.4
      All data are as of market close Wednesday, Feb. 10, 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. 9. 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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