U.S. economic news
More signs of consumer spendingRetail sales surged 1.6% in March. The increase, which is the largest in four months, is encouraging some analysts to upgrade their assessments of the economy's ability to generate a sufficient number of jobs to sustain the recovery. Companies are said to have benefited from an earlier Easter, better weather, and a pickup in hiring. Recovery in the retail area is seen as an indication that the expansion is no longer solely dependent on manufacturing gains. In March manufacturing activity rose 0.9% as stronger sales and inventories gave a boost to factory production. Housing starts rebounded to a 16-month high in March, a pickup suggests that the burst of stronger home sales has persuaded a few builders to ramp up construction again. Starts climbed to an annual rate of 626,000 for the month of March, up 1.6% from February.
Jobless claims rise again amid shaky recovery in labor market
The U.S. Department of Labor reported that jobless claims rose by 24,000 to 484,000 in the week of April 10. This week U.S. Federal Reserve Board Chairman Ben S. Bernanke said that the labor market would be slow to recoup the losses it sustained since the recession began in December 2007.
U.S. and global corporate news
On Friday the Securities and Exchange Commission charged Goldman Sachs & Co. with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages. The charge is one of the biggest moves by authorities in response to the financial crisis of 2007 to 2008. Goldman Sachs' stock price fell sharply after the announcement.Volcanic eruption in Iceland disrupts flights across Europe
A volcanic explosion in Iceland forced authorities to impose one of the most extensive bans on commercial flights since World War II. Fears that volcanic particles could choke aircraft engines prompted the grounding of flights across Europe. After the eruption on Wednesday of the Eyjafjallajokull, the volcano spat a plume of ash that spread southeast across the continent. Many airline stocks have slid on the news because service will be disrupted into the weekend.
Tech industry shows signs of recovery
The technology industry showed more signs of recovery this week as tech spending by companies and consumers picked up. Evidence of the rebound was seen as Google's profit rose 37% after a 23% jump in revenue. The gains suggest a recovery in online advertising. AMD reported a 34% increase in revenue to record levels, and Intel announced a quarterly profit that nearly quadrupled on a 44% jump in sales. Intel's profit and revenue surge kicked off an upbeat earnings season for the tech companies as demand continues to improve for laptops and server systems.
Bank of America posted its first profit in three quarters; although its income fell about 10% from where it was a year ago. Profit gains in the first three months of the year were helped by a surge in investment banking revenue. Overall revenue for the quarter dropped 11%.
Charles Schwab's first-quarter profits fell by nearly one-half their levels of a year ago, as low interest rates and a trading revenue decline of nearly one-fifth affected its results.
The New Jersey Transit board of directors agreed on a 25% fare increase for trains and New York City-bound buses to help the nation's third-largest transit system close a $300 million deficit.
CSX reported that profits climbed 24% as freight volume rose 5% overall.
Global economic news
Greece requests meeting to discuss aidGreek Prime Minister George Papandreou asked for a meeting next week in Athens with the European Union, the International Monetary Fund, and the European Central Bank. Talks will begin among the groups, which agreed to back a 45 billion euro loan package. The request came this week after Greek 10-year yields rose to 7.255%, near where the rate stood before the 45 billion euro rescue package was unveiled on April 11.
China's economy grows 11.9%
China's economy expanded 11.9% in the first quarter from a year earlier. This was the biggest gain since the second quarter of 2007. Also this week, China announced plans to cool its real-estate market amid concern that an asset bubble may have been created. The announcement is thought to reflect a policy shift aimed at significantly tightening the supply of credit for home purchases.
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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