Week in Review: Stocks gain amid Greek bailout hopes and strong economic news

U.S. economic news

Strong sales boost growth expectations
In a sign that consumers are spending more, U.S. retail sales unexpectedly rose in February; purchases increased 0.3%, the fourth gain in the past five months. That rise along with news that fewer Americans filed first-time claims for jobless benefits last week, helped power a rise in U.S. stocks.
U.S. household total net worth increased 1.3% in the fourth quarter. For 2009 as a whole, it rose 5.4%. It was the third quarter in a row that net worth climbed; a large amount of that increase came from a drop in household debt, which fell by 1.7% in 2009, the first annual drop since the record-keeping began in 1945.
The U.S. trade deficit unexpectedly narrowed 6.6% in January as imports and exports both declined. Americans imported the fewest barrels of crude oil in a decade and demand for automobiles dropped.

U.S. and global corporate news

BP buys Devon Assets
BP announced on Thursday that it would pay Devon $7 billion in cash for its assets in Brazil, Azerbaijan, and the deep-water part of the Gulf of Mexico. It also will sell Devon a 50% stake in its Kirby oil-sands interests in Alberta, Canada, for $500 million. The two companies will form a joint venture to develop the property.


BMW profits up 36%
BMW reported a 36% increase in 2009 net profit but said it is cautiously optimistic for 2010. That increase came in a year when luxury carmakers experienced a steep downturn.

Global economic news

Global confidence drops
Confidence in the world economy declined in March for the second month amid concern that the fallout from the Greek business crisis would undermine the global recovery. The Bloomberg Professional Global Confidence Index dropped to 53.8 from 54.9 in February. While this is the eighth month that this reading has been above 50, an indication that there are more optimists than pessimists, sentiment still fell in Europe.


Greeks strike
Greece's pledges of budget cuts sparked nationwide strikes this week. Greek hospitals, airports, and schools were shut and police sparred with protesters as unions staged the second general strike this year protesting the budget cuts.


European production increases more than expected
Despite the drop in confidence, signs of stronger growth emerged in Europe. In January European industrial output rose 1.7%, the most in two decades, as economic growth prompted companies to boost the production of goods.


China's inflation soars
China's inflation reached a 16-month high, rising 2.7% in February from a year earlier. Production rose 20.7% in the first two months of 2010. The rapid growth in China's bank lending and investment spending slowed in February. That slowing is seen as a sign that the government's gradual withdrawal of stimulus policies in recent months is starting to have an effect on the real economy.


Japan shows weaker-than-expected growth
Revised data show that Japan's fourth-quarter growth was weaker than previously thought and that the economy actually contracted in the third quarter. The Japanese cabinet office cut the October-to-December gross domestic product growth rate to 3.8% from the 4.6% announced last month. The government attributed the decline to a drop in private-sector inventory and weaker-than-expected business and government spending.


Brazil's expansion sparks rate-increase speculation
Brazil's economy expanded 2% in the last quarter of 2009 from the previous three months. That increase has upped speculation that the central bank will increase the benchmark interest rate at its next meeting.

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon, and tolerance for risk. Diversification does not guarantee a profit or protect against loss.

The views expressed here are those of MFS^®and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any MFS investment product. Individual securities mentioned are for illustrative purposes only and may not be relied upon as investment advice or as an indication of trading intent on behalf of any MFS product.

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual, or quarterly report.


Past performance is no guarantee of future results.

Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; boston.com.

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Market Week: March 8, 2010

The Markets

Back to black: Domestic equities clawed their way back into positive territory for the year, with small caps continuing to lead the way. A lackluster week with continued light volume finished strong with a 122-point jump in the Dow and the sixth straight up day for the S&P 500. Bond investors took heart from strong demand for an auction of Greek bonds.

Market/Index	2009 Close	Prior Week	As of 3/5	Week Change	YTD Change
DJIA	10428.05	10325.26	10566.20	2.33%	1.32%
NASDAQ	2269.15	2238.26	2326.35	3.94	2.52%
S&P 500	1115.10	1104.49	1138.70	3.10%	2.12%
Russell 2000	625.39	628.56	666.02	5.96%	6.5%
Global Dow	1984.48	1891.56	1960.23	3.63%	-1.22%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.61%	3.69%	8 bps	-16 bps

Last Week's Headlines

• Despite expectations that February's dismal weather might also mean dismal unemployment figures, unemployment remained at 9.7% in February. The 36,000 jobs cut from nonfarm payrolls was a far cry from last year's triple-digit job losses, and hiring of temporary workers continued to increase. However, about 4 in 10 unemployed workers have been out of work for at least 27 weeks.
• Consumers opened their wallets a bit more in January. Personal spending was up 0.5%, though incomes rose only 0.1% during the month. At least some of that increased spending was the result of higher prices; personal consumption expenditures, including food and energy costs, were up 0.2% in January.
• Manufacturers remained in growth mode in February. Though the Institute for Supply Management's index of manufacturing activity fell slightly, it remained above 50 for the seventh straight month--a level that indicates expansion. Meanwhile, services sectors grew at the fastest pace in more than two years.
• Construction spending fell 0.6% in January. A 1.1% increase in residential construction project spending was offset by a 1.4% drop in commercial projects.
• U.S. business productivity in the second half of 2009 was even higher than previously estimated. Nonfarm businesses increased their output by 2.5%, in part because the total number of hours worked by the labor force fell. Labor costs dropped 1.7% in 2009, the biggest annual decline since the Bureau of Labor Statistics began keeping records in 1948.

Eye on the Week Ahead

With little economic data to digest, investors will be trying to sort out whether last week represented a pause in the pain or a renewal of the rally that began a year ago Tuesday.

Key data releases: International trade (3/11); retail sales (3/12).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

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