Week in Review: Stocks rebound amid pre-earnings season enthusiasm

U.S. economic news

Retailers record strong growth; jobless claims fall; service sector growth slows
News that U.S. retail sales are growing at the fastest pace in four years added to positive investor sentiment this week. The International Council of Shopping Centers said that sales probably expanded at an average monthly rate of 4% in the first five months of the retail year that began January 31. Other data were consistent with signs of a gradual improvement in labor market conditions. Initial unemployment insurance claims fell 21,000 last week, to 454,000.

The U.S. service sector grew more slowly in June as business leaders worried about the state of the labor market, according to the Institute for Supply Management's overall index of nonmanufacturing activity. The Institute's non-manufacturing employment index moved to 49.7 from 50.4, indicating a contraction within the sector.

U.S. and global corporate news

State Street earnings upgrade kicks off second-quarter enthusiasm
State Street kicked off the earnings season enthusiasm this week when it said it will report a second-quarter operating profit that is well above forecasts, putting it on track to hit its full year guidance. The company said that its results were helped by "momentum" in its servicing fee revenue as well as improvement in trading-services fee revenue. Official earnings will be reported on July 20.


China renews Google license
Google shares surged on Friday after the Chinese government renewed a license Google needed to continue to use its Chinese Web address. The renewal came after Google made a compromise with Chinese regulators and will enable Google to continue to provide Web search and local products to users in China. The dispute began in January after Google announced it would no longer comply with China's self-censorship rules because of the government tightening free speech limits and a series of cyber attacks that Google said originated in China.


Total to buy UTS
France's Total agreed to buy UTS energy for $1.42 billion as it sought to boost its Canadian oil sands portfolio.


Merck to cut 15,000 jobs
Merck will close eight research labs and eight manufacturing plants as part of a previously announced plan to reduce operations after it acquired Schering Plough last year. The cuts are part of a plan to reduce 15%, or about 15,000 jobs, of the combined company's work force following the acquisition.

Global economic news

IMF ups world growth forecast
The International Monetary Fund said the world economy will likely grow faster than expected, but as major risks remain the pace of growth is likely to slow. The IMF raised its global growth forecast to 4.6% from the 4.2% projection made in April.


CEBS releases stress test details
The Committee of European Banking Supervisors (CEBS) released details on "stress tests" for 91 European banks. The CEBS tests are designed to assess how banks will be able to absorb losses on loans and government bonds.

It laid out the key features included in these tests that will be carried out by the CEBS in cooperation with the European Central Bank. The results are scheduled to be published on July 23. Lenders that account for 65% of the EU banking industry will be tested. Regulators are relying on the tests to restore public confidence in banks amid concerns that some lenders do not have enough capital to withstand a default by a European country.


Canada creates more jobs than expected
Canada created five times more jobs than expected in June, and its jobless rate fell to 7.9%, the lowest since January 2009. The country has now restored most of the jobs lost since 2008. This week the International Monetary Fund called the job market one of the strongest contributors to the Canadian recovery.


BOE, ECB keep interest rates unchanged
The Bank of England and European Central Bank kept interest rates unchanged this week. The BOE also kept its bond stimulus plan in place as it tries to prevent the economy from falling into recession during the country's biggest budget squeeze since World War II. ECB President Jean-Claude Trichet said the eurozone economy would perform "much better" in the second quarter than the first and suggested that the ECB could lean toward cutting back a bond-buying program it began in May to help tackle the region's sovereign debt crisis. The IMF this week said the ECB may have to step up its bond purchases to convince investors it will not allow market tensions to escalate.


Bank of Korea raises rates
The Bank of Korea increased its base interest rate for the first time since August 2008 as its economy rebounded to pre-crisis levels with the unemployment rate at 19-month lows.


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.

--see disclaimer below--

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Week in Review: Markets continue to slide as world economy struggles

U.S. economic news

U.S. unemployment rate drops, jobless numbers grow
The official U.S. unemployment rate fell to 9.5% in June from 9.7% in May, in a report released Friday morning by the Labor Department. The U.S. economy shed 125,000 jobs in June, mainly driven by the elimination of temporary census jobs. Private sector jobs grew by 83,000. While the news was not rosy, it was better than had been expected and caused a minor rebound in the major U.S. stock indices Friday morning.

Weekly jobless claims climb
Weekly initial jobless claims rose 13,000 to 472,000 in the week ended June 26. The four-week moving average, which smooths the data’s volatility, rose 3,250 to 466,500.

U.S. consumer confidence declines
Consumer confidence fell substantially in June as concerns grew about the U.S. economic recovery. The Conference Board’s index of consumer confidence for June declined to 52.9 from 62.7 in May, far below the 62.5 reading economists had expected in a survey conducted by Dow Jones Newswire.

U.S. manufacturing activity grows more slowly
U.S. factory activity slowed in June. The Institute for Supply Management index dropped to 56.2 from 59.7. This measure indicates that manufacturing activity was growing but at a slower pace. The ISM business barometer slipped to 59.1 in June from 59.7 in May.

Pending home sales plummet
U.S. pending home sales fell 30% in May with the termination of the federal tax credit program that had given a key boost to the housing market. The National Association of Realtors index for pending sales of existing homes dropped to 77.6 from 110.9 in April. Pending home sales in May were down almost 16% from a year earlier.

Automakers’ sales stall
New vehicle sales in the United States decelerated in June, providing another signal that the economy could be stalling. According to Autodata, U.S. auto sales fell about 4.7% from May to June. Sales fell 14% for Toyota, 13% for General Motors, 12% for Chrysler, and 11% for Ford, levels that exceeded the typical annual May-to-June 3% sales decline. However, all automakers reported increases from a year earlier.

U.S. and global corporate news

General Mills’ profit declines
Packaged food company General Mills reported a 41% decline in its fourth-quarter earnings, and its sales fell 2% from the year-earlier period, which included an extra week. However, excluding the extra week, earnings fell only 5%, and sales rose 4%.

Monsanto earnings fall
Agricultural biotechnology company Monsanto posted a 45% drop in its third-quarter profit, hurt by weed-killer competition and a backlash by farmers against high-priced genetically modified seeds. Sales fell 6.3% for the quarter.

Global economic news

Factory growth continues but gains slow globally
Manufacturing activity expanded globally in June, but the pace of growth slowed in most countries. Only Greece, Hungary, and South Africa had a contraction in manufacturing, while Germany, Brazil, Italy, Russia, and Poland saw a pickup in the pace of growth in their purchasing manager indices, according to The Wall Street Journal. Countries that recorded slower growth included the United States, China, the United Kingdom, Japan, France, and Spain.

Japan’s economy slows slightly
Industrial output in Japan fell a seasonally adjusted 0.1% in May, due largely to a 1.7% slowdown in exports, which were hurt by the fading impact of economic stimulus measures, recalls from Toyota and other Japanese automakers, and strikes at Chinese factories. Japanese industrial output had risen the three previous months.

Eurozone economic recovery falters
The Conference Board’s Leading Economic Index for the eurozone fell 0.5% to 109.7 in May, its first decline in 14 months. However, the LEI for the eurozone is still almost 15% higher than its trough in March 2009.

Consumer confidence climbs in eurozone
Consumer confidence rose slightly in June in the Eurozone, according to the European Commission’s overall Economic Sentiment Indicator, which rose to 98.7 from 98.4. Economists had forecast a decline to 98. However, consumer confidence in the United Kingdom fell in June to its lowest level since last August.

German unemployment ebbs for the 12^th straight month
Despite problems facing other European countries, Germany continues to make progress on its economic recovery, as German unemployment fell for a twelfth consecutive month in June. The unemployment rate in Europe’s largest economy declined to 7.5% from 7.7% in May. The number of jobless fell by 88,000 to 3,153 million, according to the Federal Labor Agency. However, when adjusted for seasonal swings, the jobless rate was 7.7%, unchanged from May, and the number of jobless declined by only 21,000.

U.S. and global corporate news

Nike profit leaps 53%
Nike's fourth-quarter profit was a healthy 53% higher than a year earlier as the athletic shoe maker benefited from streamlined costs and trimmed inventory along with robust sales growth in the United States, Europe, and emerging markets.

Oracle profit rises 25%
Oracle posted strong sales and earnings results on an increase in sales of database and other business software and new revenue from its acquisition of Sun Microsystems. Oracle's revenue rose 39% to $9.5 billion, including $1.8 billion of revenue from Sun products and support services.

Dell forecasts revenue growth
Dell issued a statement ahead of its annual analyst meeting next week, forecasting revenue growth of 14% to 19% for the rest of the fiscal year. Dell, once the world's largest personal computer maker, but now ranked third, also said it expects adjusted operating income to rise 18% to 23%.

Global economic news

China eases USD currency peg
In a move to help escape criticism for manipulating global currency markets, China removed the yuan's two-year peg to the U.S. dollar, allowing it a limited amount of flexibility. It is expected that a stronger Chinese currency will help the exports of other countries, including the United States, become more competitive. The move comes just before this weekend's G-20 meeting in Toronto.

Greek debt costs more to insure
In yet another reflection of market anxiety over Greek debt levels, the cost of insuring Greek sovereign debt against default rose early Friday, reaching a record. Greece's five-year sovereign credit default swaps reached 11.31 percentage points. This means that it would cost $1.131 million annually to insure $10 million of Greek government debt for five years. It implies a 69% probability of default over the next five years.

Germany, France, United Kingdom to levy banks
Governments in Germany, France, and the United Kingdom said they will introduce bank levies to pay for future financial crises, and they will urge their counterparts at the Group of 20 industrial and developing nations to take similar actions at this week's G-20 meeting in Toronto.

German business confidence rises
German business confidence rose in June based on an index of German business sentiment published by Ifo, which reached 101.8 in June from 101.5 in May. Economists had forecast a drop below 101. A sub-index measuring current business conditions was strong, but another index indicating expectations of trade conditions in the next six months declined.

Taiwan raises rates
In a surprise move, Taiwan's central bank raised interest rates, its first such move since June 2008. The Central Bank of the Republic of China (Taiwan) raised its key rates by 12.5 basis points and stated the economy is performing better than anticipated. Taiwan joins numerous Asian neighboring countries in raising rates as the region's robust economies rebound from the recession. Australia, New Zealand, India, Vietnam, and Malaysia have all increased interest rates, while China, Indonesia, Singapore, and the Philippines have taken other actions to tighten monetary policy.


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

--see disclaimer below--

Market Week: June 28, 2010

The Markets

Domestic equities saw their second straight week of starting strong and then trailing downward by week's end, depressed in part by weak housing statistics. The decline left the indexes (with the exception of the small-cap Russell 2000) back in the red for the year and investors seeking reassurance from bonds, which helped push down Treasury yields.

Market/Index	2009 Close	Prior Week	As of 6/25	Week Change	YTD Change
DJIA	10428.05	10450.64	10143.81	-2.94%	-2.73%
NASDAQ	2269.15	2309.80	2223.48	-3.74%	-2.01%
S&P 500	1115.10	1117.51	1076.76	-3.65%	-3.44%
Russell 2000	625.39	666.92	645.11	-3.27%	3.15%
Global Dow	1984.48	1824.61	1773.85	-2.78%	-10.61%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.24%	3.12%	-12 bps	-73 bps

Last Week's Headlines

• Congressional leaders agreed on a financial reform package that reconciles the House and Senate versions. Among the provisions of the Dodd-Frank bill are measures that require banks to hold additional capital to cover potential losses and set up separate operations to handle risky derivative trades such as swaps. The so-called "Volcker rule" also would restrict proprietary trading by banks. Derivatives would be regulated for the first time; routine derivatives would be traded on exchanges and nonstandard derivatives would be reported to a central authority. The bill also creates a consumer financial protection bureau, under the authority of the Federal Reserve, to oversee financial products. A federal agency would have the authority to step in and manage the dismantling of a failing bank. Hedge funds would be required to register with the SEC and credit rating firms would be subject to additional federal supervision. The amount of FDIC insurance for bank accounts, which was increased to $250,000 in the wake of the financial crisis, would remain at that level permanently. It also requires mortgage lenders to verify that a borrower's income, credit history, and employment record indicate the ability to repay the loan. Public companies would have to allow shareholders a nonbinding vote on executive compensation. Large banks would pay a fee to help cover the costs of implementing the bill's provisions.
• The Federal Reserve issued a slightly more downbeat assessment of the U.S. economy's prospect, saying Europe's problems have created conditions that are "less supportive of economic growth" here. That makes it even more likely that today's rock-bottom interest rates will continue for some time.
• Existing home sales fell 2.2% in May, according to the National Association of Realtors, though they were up 19% from last May. The report covers completed sales, which would have been initiated before the April 30 contract signing deadline for qualifying for the federal first-time homebuyer tax credit. Meanwhile, according to the Census Bureau, new single-family home sales plummeted 32.7% in May to 300,000, despite mortgage rates that Freddie Mac said were at record lows.
• A drop in orders for civilian aircraft and other transportation-related items cut durable goods orders 1.1% in May, the Census Bureau said. However, excluding transportation, orders for such items as machinery and computer equipment rose 0.9%.
• The G-20 countries agreed to slash their budget deficits in half by 2013, but each will address its spending and revenue dilemmas in its own way.
• The Bureau of Economic Analysis' estimate of first quarter Gross Domestic Product (GDP) was revised downward once again, from 3% to 2.7%.

Eye on the Week Ahead
As the second quarter comes to an end, the fate of the financial reform package will be of interest as leaders try to bring it to a vote in the House this week. And as always, Friday's unemployment numbers will be closely watched.

Key data releases: Personal income/spending (6/28); home prices (6/29); auto sales, manufacturing, construction spending, pending home sales (7/1); unemployment (7/2).

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.

--see disclaimer below--

Week in Review: Markets slump, weighed down by economic news

U.S. economic news

U.S. Home sales plunge
Sales of existing homes fell by 2.2% in May, a disappointment from an anticipated increase of 5%, the National Association of Realtors reported. Still, May's home sales represented a 19% increase from the year-earlier figures. May's sales numbers were influenced by the federal tax credit for homebuyers, which technically expired in April but applies to mortgages that close by the end of June. Meanwhile, sales of new homes, which make up one-tenth of the market, fell to a record low in May, according to the U.S. Department of Commerce. New single-family homes sold at a seasonally adjusted annual rate of 300,000 in May, down 33% from 446,000 in April.


Mortgage rates fall
U.S. residential mortgage rates hit an all-time trough, with 15-year fixed-rate mortgages dipping to 4.13%, with an average 0.6 points, and 30-year mortgages were available for 4.69%, with an average of 0.7 points.


First-quarter growth lowered
The official figure for U.S. economic growth in the first quarter of 2010 was lowered by the U.S. Department of Commerce on Friday, from 3.2% real annual GDP growth to 2.7%. Consumer spending was weaker than previously thought.


Jobless claims decline
Initial claims for jobless benefits decreased by 19,000 to 457,000 for the week ended June 19, a larger-than-expected decline, the U.S. Labor Department reported. The four-week moving average fell to 462,750 last week from 464,250 the week before.


Durable goods orders taper off
Orders for durable goods, designed to last three years or longer, decreased by 1.1% after rising for five consecutive months. However, orders for non-defense capital goods excluding aircraft rose by 2.1%.


Fed holds rates steady
The U.S. Federal Reserve surprised no one by leaving its short-term federal funds target interest rate untouched at 0% to 0.25%. There was a slight change in the wording of the Fed's statement, that "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad." Projected timing of an initial Fed interest rate hike has been pushed back from fall 2010 to as late as 2012.

U.S. and global corporate news

Nike profit leaps 53%
Nike's fourth-quarter profit was a healthy 53% higher than a year earlier as the athletic shoe maker benefited from streamlined costs and trimmed inventory along with robust sales growth in the United States, Europe, and emerging markets.


Oracle profit rises 25%
Oracle posted strong sales and earnings results on an increase in sales of database and other business software and new revenue from its acquisition of Sun Microsystems. Oracle's revenue rose 39% to $9.5 billion, including $1.8 billion of revenue from Sun products and support services.


Dell forecasts revenue growth
Dell issued a statement ahead of its annual analyst meeting next week, forecasting revenue growth of 14% to 19% for the rest of the fiscal year. Dell, once the world's largest personal computer maker, but now ranked third, also said it expects adjusted operating income to rise 18% to 23%.

Global economic news

China eases USD currency peg
In a move to help escape criticism for manipulating global currency markets, China removed the yuan's two-year peg to the U.S. dollar, allowing it a limited amount of flexibility. It is expected that a stronger Chinese currency will help the exports of other countries, including the United States, become more competitive. The move comes just before this weekend's G-20 meeting in Toronto.


Greek debt costs more to insure
In yet another reflection of market anxiety over Greek debt levels, the cost of insuring Greek sovereign debt against default rose early Friday, reaching a record. Greece's five-year sovereign credit default swaps reached 11.31 percentage points. This means that it would cost $1.131 million annually to insure $10 million of Greek government debt for five years. It implies a 69% probability of default over the next five years.


Germany, France, United Kingdom to levy banks
Governments in Germany, France, and the United Kingdom said they will introduce bank levies to pay for future financial crises, and they will urge their counterparts at the Group of 20 industrial and developing nations to take similar actions at this week's G-20 meeting in Toronto.


German business confidence rises
German business confidence rose in June based on an index of German business sentiment published by Ifo, which reached 101.8 in June from 101.5 in May. Economists had forecast a drop below 101. A sub-index measuring current business conditions was strong, but another index indicating expectations of trade conditions in the next six months declined.


Taiwan raises rates
In a surprise move, Taiwan's central bank raised interest rates, its first such move since June 2008. The Central Bank of the Republic of China (Taiwan) raised its key rates by 12.5 basis points and stated the economy is performing better than anticipated. Taiwan joins numerous Asian neighboring countries in raising rates as the region's robust economies rebound from the recession. Australia, New Zealand, India, Vietnam, and Malaysia have all increased interest rates, while China, Indonesia, Singapore, and the Philippines have taken other actions to tighten monetary policy.

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.

--see disclaimer below--

The Markets

A strong start to the week enabled domestic equities to regain a foothold in positive territory for the year, though traders began to doze off by the end of the week. As anxiety about Europe eased, the Global Dow outpaced the four domestic indexes for the week.

Market/Index	2009 Close	Prior Week	As of 6/18	Week Change	YTD Change
DJIA	10428.05	10211.07	10450.64	2.35%	.22%
NASDAQ	2269.15	2243.60	2309.80	2.95%	1.79%
S&P 500	1115.10	1091.60	1117.51	2.37%	.22%
Russell 2000	625.39	649.00	666.92	2.76%	6.64%
Global Dow	1984.48	1766.71	1824.61	3.28%	-8.06%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.24%	3.24%	0 bps	-61 bps

Last Week's Headlines

• The Bureau of Labor Statistics said consumer inflation fell in May for the second month in a row, largely because of lower gas prices. Even excluding volatile gas and food prices, inflation remained unchanged. Lower energy costs also cut wholesale prices overall 0.3% in May, though they continued to be higher on a year-over-year basis.
• As the homebuyer tax credit began to wind down in May, housing starts for single-family homes fell more than 17% from the month before, according to the Commerce Department. Single-family building permits also were down. However, both building permits and housing starts for all privately-owned homes were up from last year.
• Moody's became the second rating agency to downgrade Greek sovereign debt to junk status. Meanwhile, a successful auction of Spanish debt reassured investors, and French officials proposed raising the country's retirement age to 62 instead of 60.
• After BP CEO Tony Hayward failed to provide satisfactory answers to a congressional subcommittee investigating the causes of the Gulf oil spill, the company announced that the company was creating a stand-alone organization with day-to-day responsibility for managing BP's response to the disaster.
• Industrial production in the U.S. was up 1.2% in May, according to the Federal Reserve Board. That put it 7.9% higher than last year at this time. Manufacturing output was almost 8% higher than last year, and a greater amount of industrial production capacity (almost 75%) was used.
• The Conference Board's Index of Leading Economic Indicators continued to improve, rising 0.4% in May, though the rate of growth is slower than in May 2009.
• In advance of this week's G-20 meeting, China announced it will allow its currency to fluctuate more rather than being pegged to the U.S. dollar--a move that has been advocated by the U.S. The World Bank said it expects China's growth to ease off a bit this year to an annual rate of 9.5%, and to 8.5% in 2011. Contributing to the uncertainty are the country's soaring housing costs, increasing inflation, and declining trade surplus.

Eye on the Week Ahead

Both the G-20 and the Federal Reserve Open Market Committee (FOMC) meet this week. Additional auctions of intermediate-term Treasury debt and Friday's Gross Domestic Product (GDP) number will be watched for any signs of risk aversion and economic slowdown.

Key data releases: Home resales (6/22); new home sales, FOMC announcement (6/23); durable goods orders (6/24); final Q1 GDP (6/25).

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.

--see disclaimer below--

Week in Review: Global stocks climb amid rising optimism

U.S. economic news

Manufacturing activity perks up
Output at U.S. factories, mines, and utilities increased 1.2% in May, adding to a 0.7% gain in April, according to a report from the U.S. Federal Reserve Board. Industrial production had been projected to rise 0.9% in May, based on a Bloomberg News survey of economists. Rising demand from overseas markets has led companies to rebuild inventories and invest in new equipment. U.S. exports have risen in 10 of the past 12 months, according to figures from the U.S. Department of Commerce.


U.S. housing starts slide
Countering the resurgence in manufacturing activity and the implied rebound in business confidence, U.S. housing starts slumped in May. This was not surprising given the expiration of the federal government’s tax credit for first-time home buyers. U.S. housing starts fell 10% to a seasonally adjusted annual level of 593,000 in May. The National Association of Home Builders reported a drop in its confidence index in June, to 17 from 22.


U.S. consumer, producer prices stable
Inflation pressures remained tame in May according to indices that measure consumer and producer prices. In reports released by the U.S. Department of Labor this week, producer prices for finished goods fell a seasonally adjusted 0.3% in May from April, but they were 5.3% higher than a year earlier. Excluding food and energy prices, however, wholesale inflation rose by 0.2% in May. The Consumer Price Index dropped 0.2% in May, but as with producer prices, the underlying consumer prices, excluding volatile energy and food items, rose 0.1%. Consumer prices were 2.0% higher than 12 months earlier on an unadjusted basis.


U.S. jobless claims rise
Initial claims for jobless benefits in the United States rose by 12,000 to 472,000 for the week ended June 12. However, the four-week average, which smoothes volatility in the weekly numbers, fell by 500 to 463,500. The official unemployment rate remains elevated, at 9.7%.

U.S. and global corporate news

BP commits to $20 billion fund, halts dividend
Under pressure from the U.S. government, BP agreed to set aside $20 billion to clean up the massive Gulf of Mexico oil spill and to compensate victims of the environmental disaster. The oil giant also suspended its dividend to shareholders and will sell about $10 billion in assets over the next year to raise cash. In other news, BP’s credit rating was lowered to "A2" by Moody’s, following downgrades by Fitch and Standard & Poor's in recent days.


FedEx sees global recovery
Executives of FedEx said they are observing a broad-based recovery, driven by activity in Asia and not adversely affected by sluggishness in Europe. The leading U.S.-based package delivery firm, which is seen as a bellwether for economic activity, expects rising demand for its services and economic growth of more than 3% in the United States and globally for its fiscal year ending May 2011.

Global economic news

Eurozone inflation picks up
Eurozone consumer price inflation rose 0.1% in May from April and 1.6% from a year earlier, according to Eurostat, the European Union’s statistics office. Although price increases in the region rose to their highest levels in 18 months, they remain below the target of just under 2% set by the European Central Bank. Core inflation, excluding energy, food, alcohol, and tobacco, rose 0.1% on the month and 0.8% on the year.


German economic expectations slide
German economic expectations declined in June in their sharpest drop since the collapse of U.S. investment bank Lehman Brothers in October 2008. The ZEW Indicator of Economic Sentiment for Germany fell to 28.7 points in June from 45.8 points in May. However, the country’s economic outlook remains positive.


U.K. jobless claims drop
The number of people claiming jobless benefits in the United Kingdom fell more than expected in May according to the Office for National Statistics. The total number of recipients of claimant benefits fell 30,900 to 1.48 million in May, and the unemployment rate – the “claimant count rate” – declined by one-tenth of a percentage point.

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.

--see disclaimer below--

Market Week: June 14, 2010

The Markets

On Monday, the Dow fell just below the lowest point reached during the May 6 flash crash. However, a strong bounce on Thursday helped give the S&P 500 its best week since early March, and the Dow once again closed above the 10,000 mark, leaving investors to wonder whether the recent downdraft is at an end or only taking a breather.

Market/Index	2009 Close	Prior Week	As of 6/11	Week Change	YTD Change
DJIA	10428.05	9931.97	10211.07	2.81%	-2.08%
NASDAQ	2269.15	2219.17	2243.60	1.10%	-1.13%
S&P 500	1115.10	1064.88	1091.60	2.51%	-2.11%
Russell 2000	625.39	633.97	649.00	2.37%	3.78%
Global Dow	1984.48	1741.90	1766.71	1.42%	-10.97%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.20%	3.24%	4 bps	-61 bps

Last Week's Headlines

• For the first time since last September, shoppers cut back on spending. According to the Commerce Department, U.S. retail sales were down 1.2% in May, though they were still 6.9% higher than a year ago.
• For a change, there was a glimmer of good news out of Europe. The European Central Bank raised slightly its estimate of eurozone growth for the rest of the year to between 0.7%-1.3%. However, though it still expects growth to pick up in 2011, the bank's current 0.2%-2.2% estimate was lower than its March forecast.
• Though credit card balances were down 12% in April, consumers borrowed an additional $1 billion. Auto, student, and personal loans were up, according to the Federal Reserve Board.
• The Commerce Department said the U.S. trade deficit rose slightly in April to $40.3 billion as exports fell and higher oil prices pushed up the cost of imports.
• Consumer sentiment rose to its highest level in more than two years. The University of Michigan/Reuters June index hit 75.5, up from its 73.6 reading in late May.

Eye on the Week Ahead

With earnings announcements largely at an end, there's little on the horizon to distract from economic data that will be dominated by housing and inflation. The simultaneous quarterly expiration of stock options, stock futures, stock index options, and stock index futures could bring volatility.

Key data releases: Treasury international capital flows, housing market index (6/15); housing starts, wholesale inflation, industrial production (6/16); consumer inflation (6/17); quadruple witching expiration (6/19).

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.

--see disclaimer below--

Week in Review: Volatility ensues as investors watch data and European debt response

U.S. economic news

Bernanke's assurances boost stocks
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average both got a boost midweek when U.S. Federal Reserve Board Chairman Ben S. Bernanke said the Fed would act as needed to support the economic recovery.


U.S. consumer confidence at highest level in two years
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased in June to its highest level in more than two years. Gauges reflecting consumers' perceptions of current financial conditions and their expectations for the next six months both rose. The two gauges are used to project future consumer spending.


Retail sales fall; trade deficit widens
Sales at U.S. retailers fell unexpectedly in May as purchases declined 1.2% after rising 0.6% in April. The drop was the largest since September 2009. Demand fell especially hard at building materials stores — a reflection of the end of the government appliance rebate. Also because of a drop in demand, the U.S. trade deficit widened in April to the highest level in more than a year as exports and imports both declined. The gap grew 0.6% to $40.3 billion.

U.S. and global corporate news

British government voices support for BP
The British government made its first public show of support for BP on Thursday when U.K. Chancellor of the Exchequer George Osborne cited the economic value the company brings to the people of the United States and United Kingdom. The comments came as the Obama administration stepped up the pressure on BP over its handling of the Gulf of Mexico oil spill. The estimated cost to date of the oil spill as a whole has risen to $1.43 billion.

Concern that BP would cut its dividend contributed to heavy selling of the stock Wednesday and Thursday. That selling sent the company's shares to 13-year lows. The cost of insuring BP's debt, as measured by the trade of credit default swaps, rose to levels typically charged for bonds near junk status.


FBI investigates iPad security breach
The Federal Bureau of Investigation opened an investigation into a security breach of AT&T's Web site. On Wednesday AT&T acknowledged that a flaw in its site allowed iPad users' e-mail addresses to be seen.

Global economic news

ECB extends credit to banks, keeps rates unchanged
The European Central Bank announced that it will give banks unlimited funds at a fixed rate in July, August, and September and keep buying bonds as it seeks to ease tensions in money markets and stop the euro region from breaking apart. Meanwhile the bank kept its main policy rate unchanged at 1% and raised its euro region growth forecast for 2010 to 1%, up from its previous 0.8% forecast. Still, it lowered its growth projection for 2011 down from 1.5% to 1.2% because of weaker domestic demand. The ECB also raised its inflation forecast. It now expects consumer prices to rise 1.5% in 2010 and 1.6% in 2011.


BOE keeps rates unchanged
The Bank of England kept interest rates unchanged at a record low of 0.5% in an effort to aid the economy as new Prime Minister David Cameron prepared the biggest budget cuts since the early 1980s. The bank also kept its stock of quantitative easing bond purchases at 200 billion.


New Zealand raises rates
The Reserve Bank of New Zealand raised its official cash rate a quarter of a percentage point to 2.75%. It was the first move in more than a year by the central bank after it slashed its rate 575 basis points between July 2008 and April 2009. The decision came amid an improved domestic outlook and follows a similar move last week by the Bank of Canada and a series of increases by the Reserve Bank of Australia.


China's exports jump most in six years; data show strong recovery
China's exports gained 48.5% in May from a year earlier, the biggest jump in six years. Other reports showed retail sales gained 18.7% and industrial production jumped 16.5%.


Japan's economy expands more than expected
Japan’s economy expanded more than initially estimated in the first quarter, driven by exports and an upward revision to consumer spending. Gross domestic product rose at an annualized 5% rate in the three months ended March 31. That gain is the largest since the second quarter of 2009.

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.

--see disclaimer below--

Market Week: June 7, 2010

The Markets

Slip-sliding away: From the oil disaster in the Gulf to disappointing unemployment numbers to Korean tensions to Hungary's talk of sovereign default--it all combined to blow a hole out of the bottom of the stock market on Friday. After a short but hardly sweet week of vacillation, the U.S. equities indexes lost more than 3% in a single day (5% for the Russell 2000, which barely hung on to a small gain for the year). Oil prices also plummeted as a result of the economic jitters, and the euro continued its slide against the dollar.

Market/Index	2009 Close	Prior Week	As of 6/4	Week Change	YTD Change
DJIA	10428.05	10136.63	9931.97	-2.02%	-4.76%
NASDAQ	2269.15	2257.04	2219.17	-1.68%	-2.20%
S&P 500	1115.10	1089.41	1064.88	-2.25%	-4.50%
Russell 2000	625.39	661.61	633.97	-4.18%	1.37%
Global Dow	1984.48	1780.31	1741.90	-2.16%	-12.22%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.31%	3.20%	-11 bps	-65 bps

Last Week's Headlines

• Unemployment fell from 9.9% to 9.7% in May, and the economy created 431,000 jobs. Good news? Not really. It wasn't the economy but the Census Bureau that created all but 20,000 of those jobs, and those temp jobs will end over the summer. Also, according to the Census Bureau, part of the drop in unemployment resulted from 322,000 people leaving the pool of potential workers.
• U.S. manufacturing continued to expand. The Institute for Supply Management (ISM) said May was the 10th month of expansion in a row, with almost all industries reporting growth (the only area reporting contraction was petroleum/coal). The services sector also saw its fifth straight month of expansion; the ISM's index stood at 55.4%, the same level as the previous two months (a number over 50 indicates growth).
• Hungary became the latest country to rattle global investors. Government officials spent much of their weekend backtracking from statements on Friday indicating the country could be on the brink of default because of debt problems that could be twice as bad as anticipated.
• Construction spending was up 2.7% in April, according to the Census Bureau. That was reportedly the biggest monthly increase in almost 10 years, though it's still 10.5% lower than last year's April figure. Residential construction rose 4.4%, while public construction was up 2.4%.

Eye on the Week Ahead

Oil and European sovereign debt problems aren't going away as investors continue to assess the economic impact of the Gulf oil spill and banks' exposure to the threat of default.

Key data releases: Consumer credit (6/7); balance of trade, Treasury budget (6/10); retail sales (6/11).

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.

--see disclaimer below--

Week in Review: Stocks retreat on weaker than expected jobs data and fresh debt concerns

U.S. economic news

Payrolls rise less than expected; unemployment falls to 9.7%
Payrolls rose by 431,000 in May after a 290,000 increase in April. The gain was smaller than expected and reflected a 411,000 jump in government hiring of temporary help for the 2010 census. At the same time, the unemployment rate fell to 9.7% as Americans suspended their job searches.


Manufacturing continues rebound
U.S. manufacturing grew at a solid pace in May as export orders continued to expand rapidly. The Institute for Supply Management reported that an index of export orders within its manufacturing report rose to 62 in May, its highest level since 1988. Nonmanufacturing activity also grew in May at the same pace as it did in April. That growth is an indication that the recovery that began in the manufacturing sector has broadened.


Auto sales rise
U.S. auto sales rose for the seventh month in a row in May on the strength of big gains in most car markets.

U.S. and global corporate news

Fitch and Moody's downgrade BP
On Thursday, both Fitch Ratings and Moody's Investor Services downgraded BP's long-term credit rating one notch. The agencies warned that further downgrades are possible as the company's liability for the oil spill in the Gulf of Mexico escalated into billions of dollars and it faced a criminal investigation in the United States.

May same-store sales encouraging
May same-store sales reports were encouraging despite the still uneven nature of the U.S. economic recovery. Costco Wholesale reported that same-store sales rose 9% as net sales climbed 11%. Target's same-store sales rose 1.3% and those at Saks' rose 5.8%. Sales at teen retailers American Eagle Outfitters, Buckle, and Hot Topic all fell more than expected.


Whirlpool recalls dishwashers
Whirlpool announced a recall of 1.7 million dishwashers from its Maytag unit because of a potential fire hazard. Besides Maytag, the brands under the recall include Jenn-Air, Amana, and Crosley.


Anadarko affirms outlook; Lukoil profits double
Even though the company has suspended its deepwater drilling in the Gulf of Mexico in compliance with the U.S. government's six-month ban on drilling in the Gulf, Anadarko Petroleum affirmed its 2010 production, sales volume, and capital spending plans for the year. Russia's largest privately owned producer, OAO Lukoil Holdings, reported that its first-quarter profit more than doubled from a year ago after rising crude prices offset falling production from its western Siberian fields.

Global economic news

Credit default swaps on sovereign bonds surge
Credit default swaps on sovereign bonds surged on speculation that Europe's debt crisis is worsening after Hungary said it is in a grave economic situation after the previous government manipulated figures and lied about the state of the economy.


Bank of Canada hikes rates
Given the strength of its economy, Canada this week became the first G-7 country to raise interest rates. The Bank of Canada raised its key overnight rate by 0.25% to 0.50% but refrained from indicating that this hike was the first in a series.


Kan becomes Japanese prime minister
Naoto Kan took over as Japan's prime minister this week after lawmakers from the ruling Democratic Party of Japan elected him premier. Kan, who was finance minister in the last cabinet, said he is working on a new strategy to rein in the world's largest public debt (as a percentage of gross domestic product) and safeguard economic growth ahead of midterm elections next month.


German government agrees to block short-selling
The German government agreed to block the speculative "naked" short-selling of German stocks and eurozone sovereign bonds. Germany shocked European Union partners and markets last month when it first introduced unilateral measures.


Europe's services and manufacturing slows less than expected
Growth in Europe's service and manufacturing industries slowed at a pace that was less than initially estimated for May. The growth was welcome news as the outlook for the region's economy has dimmed in recent months with the threat of contagion from the Greek debt crisis raising concerns about the region's future.


Australian exports surge most in three decades
Australian exports, excluding farm goods, surged by the most in almost three decades in April as shipments of iron ore and coal to China pushed the trade balances to a surplus for the first time in 12 months.


Pakistan central bank head quits amid economic strain
Pakistan's central bank governor Syed Salim Raza resigned Thursday. His departure raises concerns about the nation's economic management at a time when the government is grappling with a shortage of financial resources amid rising war costs.

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.

--see disclaimer below--