Week in Review: Stocks under pressure amid signs that recovery is losing momentum

U.S. economic news

Bernanke pledges Fed to do all it can to ensure recovery
U.S. Federal Reserve Board Chairman Ben Bernanke said Friday that the U.S. central bank "will do all that it can" to ensure economic recovery continues. He outlined steps the Fed might take if the economy slows. In his opening remarks to the world's central bankers in Jackson Hole, Wyoming, Bernanke said the Fed is prepared to provide additional monetary accommodation through unconventional measures if necessary.

GDP grows more slowly than thought
The U.S. economy grew more slowly that initially estimated in the second quarter and corporate profits nearly dried up. Gross Domestic Product rose from April through June at an annualized seasonally adjusted rate of 1.6%. A month ago, the government estimated the rate at 2.4% after a 3.7% expansion in the first quarter. After-tax earnings rose 0.1%, off the previous quarter's 11.4% gain.

Weak durable goods orders, drop in home sales show recovery losing pace
Weakness in durable goods orders and a drop to historic lows in new-home sales offered more signs that the economy is losing momentum. Durable goods orders rose 0.3% in July from June, mostly on the back of an increase in aircraft orders. Excluding the volatile transportation sector, orders tumbled 3.8%.

Also this week, reports showed that sales of new single-family homes fell 12.4% in July from June to a seasonally adjusted rate of 276,000, the lowest level since the data series began in 1963. Many purchasers seem to have left the markets since the expiration on April 30 of a federal tax credit for homebuyers. Existing home sales suffered a similar decline, dropping a record 27.2% to their lowest level in 15 years, as inventories soared to their highest level in more than a decade. Adding to the discouraging news were reports by the Federal Reserve Bank of Kansas City that manufacturing activity in the district stalled.

Initial jobless claims decline more than expected
More encouragingly, initial jobless claims declined by 31,000 to 473,000, more than the 10,000 drop predicted by economists. However, new claims for the previous week were revised upward, and the four-week moving average rose to the highest level since November 2009.

U.S. and global corporate news

Toyota Motor announced it will recall about 1.13 million Corolla and Matrix cars for an engine defect that U.S. regulators said could cause stalling. The recall will affect model years 2005 to 2008 in the United States and Canada and comes after three reported accidents linked to the defect. GM will recall approximately 200,000 of the Pontiac Vibe, which was designed and engineered by Toyota and built alongside the Matrix at a joint manufacturing plant in California.

Johnson & Johnson pulled two hip-repair implants off the market because of quality problems. That recall, administered through J&J's DePuy Orthopaedics unit, came the same week that J&J's Vision Care unit withdrew about 100,000 boxes of contact lenses sold in Asia and Europe because of a manufacturing problem.

Spirits giant Diageo reported its net profit rose 1.5% for the year ended June 30. Sales increased 5% but were up only 2% when stripping out the effects of currency fluctuations, acquisitions, and disposals. During the fiscal year, Diageo benefited from an 11% jump in organic net sales in emerging markets, including China and India, but suffered a 2% sales decline in the developed world.

Global economic news

U.K. economy expands 1.2%
The U.K. economy expanded 1.2% in the second quarter, marking its biggest growth spurt since 2001, as companies rebuilt inventories and construction work surged.

Standard & Poor's downgrades Ireland; Fitch upgrades Rwanda
Standard & Poor's Ratings Services cut its long-term sovereign credit rating on Ireland one notch to AA-. The company said the projected fiscal cost to the Irish government of supporting the financial sector has increased significantly above prior estimates. Ireland's banks were hit by the property market crash; as a result, the Irish government was forced to pump billions of euros into the banks.

Meanwhile, Fitch Ratings upgraded Rwanda, citing the African nation's "strong growth" and an improvement in its business environment. It noted that the country has posted an "uninterrupted" period of strong economic growth that has more than doubled its per capita income since 1994, when genocide killed some 800,000 people. The rating was upgraded to B, five steps below investment grade.

Japan's exports rise, albeit at a slower rate
Japan's exports rose in July for the eighth month in a row as sales of products, such as cars and electronic components, in emerging markets were still solid. However, the rate of growth slowed for the fifth month in a row. That pace is expected to slow even more if the yen, which this week surged to a 15-year high against the dollar, continues to appreciate.


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 information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell, 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. Full holdings are also available on the individual Fund Profile tab in the Products and Performance section on mfs.com.

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--

Week in Review: Economic weakness weighs on markets

U.S. economic news

U.S. weekly jobless claims reach 500,000
Initial unemployment claims rose unexpectedly again, hitting 500,000 for the week ended August 14. Claims increased by 12,000, though economists surveyed by Dow Jones Newswires had predicted a decline of 4,000. The four-week moving average rose by 8,000 to 482,500. The weekly jobless claims number and the four-week average reached their highest levels since late in 2009. As previously reported, the economy lost 131,000 jobs in July. Together, these reports signal a struggling economic recovery.


Philadelphia-area manufacturing index weakens
The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling an economic contraction for the first time since July 2009. The widely watched survey fell to minus 7.7 from plus 5.1 in early July. Economists surveyed by Bloomberg News had forecast a rise to plus 7.


Industrial production up slightly
U.S. industrial production rose 1% from June to July, the U.S. Federal Reserve Board reported. This was slightly better than expected.


Producer prices perk up, deflation fears ease
The U.S. Department of Labor’s Producer Price Index increased 0.2% in July after a drop of 0.5% in June. It was the index’s first rise in three months and helped ease growing concerns about deflation.

U.S. and global corporate news

BHP Billiton aims to take over Potash Corp.
Australian mining powerhouse BHP Billiton said it would ask Saskatchewan-based Potash Corp.’s shareholders directly to approve its $38.6 billion all-cash takeover bid after the fertilizer company’s board rejected the offer. The proposed acquisition needs approval from at least 50% of Potash shareholders.


Intel to acquire McAfee
Computer maker Intel agreed to pay $7.7 billion to buy computer-security software maker McAfee in the latest in a series of technology company acquisitions as profitable companies take advantage of low valuations to make bargain purchases.


GM files for an IPO
General Motors filed for a public stock offering that would allow the federal government to begin selling its 61% stake in the automaker and help GM raise money for its turnaround. GM’s interim CEO, Edward E. Whitacre, Jr., who oversaw the automaker’s dramatic return to profitability this year, will step down as chief executive September 1 and as chairman at year end. Last week, GM announced a second-quarter profit of $1.3 billion, its strongest quarter in six years.


Tech bellwethers post profits
Hewlett-Packard and Dell both reported improved profits for the quarter just ended, signaling strength in the technology sector. HP posted a 6% increase in profits on an 11% rise in revenue. Rival computer maker Dell’s profit rose 15% and its revenues were 22% higher than a year earlier.


Deere’s profit leaps
Deere & Company, the world’s largest manufacturer of farm machinery, announced a 47% jump in quarterly earnings as sales of large farm machinery and construction equipment rebounded. U.S. sales rose because of robust commodity prices, strong cash receipts from farming, and low interest rates. However, European demand continued to be weak.


Wal-Mart earnings up on non-U.S. results
Wal-Mart Stores posted a 3.6% increase in second-quarter earnings, with strong international results leading the way. The discount retail chain’s international sales and operating income had double-digit growth. However, its U.S. same-store sales fell for the fifth straight quarter.


Williams-Sonoma earnings soar
Williams-Sonoma, a retailer of housewares and home decor, posted a $30.8 billion profit for its quarter ended July 31, compared with just $399,000 during the same period a year ago. Excluding restructuring and other charges, the company grew its earnings six-fold. Revenue rose 15% and same-store sales grew 14%.

Global economic news

China passes Japan as world’s second-largest economy
In the latest reminder of China’s growing clout and Japan’s decline as an economic giant, China replaced Japan as the world’s second-largest economy in the second quarter. China’s economic output was valued at $1.33 trillion in the second quarter while Japan’s economy stood at $1.28 trillion. Japan has had the world’s second-largest economy for most of the last four decades. In comparison, U.S. second-quarter gross domestic product was $14.6 trillion, according to the U.S. Department of Commerce.


German central bank raises economic forecast
The Deutsche Bundesbank raised its 2010 forecast for German economic growth to 3% from 1.9% after second-quarter figures released last week showed surprising strength. The country's economy grew at its fastest pace in 20 years, fueled by robust growth in exports.


Japan’s GDP slows to a crawl
Japan’s economy grew at an anemic 0.4% in the second quarter, falling far below expectations because of stagnant consumption and weak exports. Strength in the yen is weighing down demand for Japanese exports.


Taiwan economy grows
Taiwan’s economy grew at a robust 12.53% in the second quarter, much faster than the median forecast of 10.5% in a Dow Jones Newswires poll, prompting the Taiwanese government to raise its full-year GDP growth forecast to 8.24% for 2010, from 6.14%.


Inflation climbs in eurozone, eases in India
An increase in eurozone inflation and a decrease in the rate of rising prices in India could both be considered good news. Higher energy prices in Europe caused the eurozone annual inflation rate to rise to 1.7%, its highest annual rate since November 2008, but still below the European Central Bank’s target of 2.0%. In India, wholesale inflation tapered to 9.97% in July from 10.55% in June.

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 information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell, 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. Full holdings are also available on the individual Fund Profile tab in the Products and Performance section on mfs.com.
Please check with your compliance deptartment before distributing to clients.

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: For Week Ending 8-13

The Markets

Cautious words from the Fed, a wider than expected trade deficit, slowing Chinese imports, worse-than-expected weekly initial unemployment claims, and a resulting pessimism about global economic growth for the rest of 2010 all helped push the four major domestic equities indexes back into negative territory for the year once again. Wednesday saw a 265-point drop in the Dow, while small caps and the NASDAQ were hit even harder. Treasury prices rose as the 10-year note's yield fell to a 16-month low. Oil prices fell to roughly $75 a barrel, hit by concerns over the potential for a double-dip global recession.

Market/Index	2009 Close	Prior Week	As of 8/13	Week Change	YTD Change
DJIA	10428.05	10653.56	10303.15	-3.29%	-1.20%
NASDAQ	2269.15	2288.47	2173.48	-5.02%	-4.22%
S&P 500	1115.10	1121.64	1079.25	-3.78%	-3.21%
Russell 2000	625.39	650.68	609.49	-6.33%	-2.54%
Global Dow	1984.48	1908.24	1827.75	-4.22%	-7.90%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.86%	2.68%	-18 bps	-117 bps

Last Week's Headlines

• The Federal Reserve Board said it will continue to help support the weak economy by buying Treasury and mortgage-backed bonds with the proceeds of maturing bonds it already holds.
• The U.S. trade deficit widened dramatically in June, jumping 18.8% from May's $42.1 billion to just under $50 billion. Imports, especially consumer goods, rose while exports fell during the month. The deficit is the largest since October 2008, the Commerce Department said. Meanwhile, China announced that its imports grew more slowly in July. That raised concerns that any decline in demand by emerging economies for products manufactured in the U.S. and elsewhere might hamper economic recovery worldwide.
• Inflation at the consumer level remained low despite a 0.3% increase in July. That translates to a 1.2% annual inflation rate, according to the Bureau of Labor Statistics.
• The faster we go, the behinder we get: Even though Americans worked longer hours in the year's second quarter, overall business productivity fell. After five quarters of strong growth, business productivity declined at an annual rate of 0.9%. The 3.6% increase in the total number of hours worked was the biggest jump since Q1 2006, according to the Bureau of Labor Statistics, while the output produced by those workers increased only 2.6%.
• Freddie Mac followed Fannie Mae in asking for an additional $1.8 billion ($1.5 billion for Fannie) from the U.S. Treasury to help it cope with ongoing losses on bad mortgages. Though Fannie Mae had said the previous week that its Q2 loss was the smallest in three years, Freddie's losses continued to rise during the second quarter.

Eye on the Week Ahead

Wholesale inflation data will be watched for any signs of deflation, and Thursday's leading economic indicators report will suggest what the next few months may hold. Other than that, earnings reports and end-of-week options expiration are the most likely catalysts for domestic equities, which could continue to see light trading volume.

Key data releases: International capital flows (8/16); housing starts, wholesale inflation, industrial production (8/17); leading economic indicators (8/19); options expiration (8/20).

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 slide as worries about slowing global growth intensify

U.S. economic news

Fed downgrades assessment of U.S. economic recovery
The Fed said this week that "the pace of economic recovery is likely to be more modest in the near term than had been anticipated." The central bank said it will buy U.S. Treasuries with proceeds from mortgage holdings. It set a $2.05 trillion floor on its holdings of government bonds and housing debt to buoy an economic recovery. The Fed's statement followed a government report last month that showed the recession that started in December 2007 was worse than estimated.


Increase in jobless claims adds to evidence of weakening economy
An unexpected increase in jobless claims this week added to evidence that the economy is weakening. The number of U.S. workers making new claims for jobless benefits climbed last week to the highest level in six months. Initial unemployment claims rose by 2,000 to 484,000 in the week ended August 7, according to the U.S. Department of Labor. Also this week, reports showed personal incomes fell in the United States last year, except in areas with a high concentration of federal government and military jobs.


Retail sales rise less than forecast
Retail sales rose less than forecast in July as a lack of jobs caused consumers to hold back on spending. Sales rose 0.4%, led by autos and gasoline. Economists predicted a 0.5% gain.


Cost of living rises
The cost of living in the United States rose for the first time in four months as the Consumer Price Index increased 0.3%, the most in a year. The gauge, excluding volatile food and energy costs, rose 0.1%.

U.S. and global corporate news

Cisco Systems results fall short of expectations
Cisco Systems' revenue from its latest quarter and its forecast for future revenue fell short of analysts' expectations. Cisco is seen as a bellwether for the technology sector and the drop in the profits of the company was viewed as a sign that consumers' reluctance to spend is starting to affect corporate sales and profits.



Freddie loses; Disney gains
Freddie Mac reported a second-quarter loss of $4.7 billion and asked the United States for $1.8 billion more in aid. Disney posted strong earnings and revenue growth aided by hit movies and an improving economic climate.


Merger and acquisition activity rises
Deal activity rose this week, boosting hopes that U.S companies are ready to put their $1.8 trillion of stockpiled cash to work. The Blackstone Group agreed to buy Dynegy for $4.7 billion, and International Business Machines said it would acquire Unica for about $480 million.

Global economic news

European economy expands more than expected
Europe’s economy expanded more than economists forecast in the second quarter as the fastest growth in Germany in two decades powered the region’s recovery. The eurozone's gross domestic product increased 1% from the first quarter when it rose 0.2%. This is the fastest growth rate that the 16-country region has experienced in four years, and it is the first time eurozone growth has outpaced that of the United States since the second quarter of 2009. Germany's exports surged in June to near prerecession levels.


China pushes currency lower
China pushed its currency sharply lower on Thursday; the move essentially wiped out gains the yuan had made since the Chinese government loosened its peg against the dollar in June. The country's trade surplus rose in July to its highest level in a year and a half.


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 information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell, 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. Full holdings are also available on the individual Fund Profile tab in the Products and Performance section on mfs.com.
Please check with your compliance department before distributing to clients.


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 Ending August 6, 2010

The Markets

Investor optimism that sent domestic equities surging on Monday was dampened but not extinguished by so-so economic news throughout the week. With large caps leading the way, stocks rebounded strongly from Friday's early swoon after a less-than-encouraging unemployment report. The week's action returned the Standard & Poor's 500 and the NASDAQ to positive territory for the year (although just barely), while the Russell 2000 remained roughly where it was two weeks ago.

Market/Index	2009 Close	Prior Week	As of 8/6	Week Change	YTD Change
DJIA	10428.05	10465.94	10653.56	1.79%	2.16%
NASDAQ	2269.15	2254.70	2288.47	1.50%	.85%
S&P 500	1115.10	1101.60	1121.64	1.82%	.59%
Russell 2000	625.39	650.89	650.68	-.03%	4.04%
Global Dow	1984.48	1855.79	1908.24	2.83%	-3.84%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.94%	2.86%	-8 bps	-99 bps

Last Week's Headlines

• An increase of 71,000 private-sector jobs in July wasn't enough to overcome the demise of 143,000 temporary census jobs, according to the Bureau of Labor Statistics. As a result, the unemployment rate stubbornly remained at 9.5%. If people considered underemployed are included, that percentage increases to 16.5%.
• July was the twelfth consecutive month of growth for the U.S. manufacturing sector, according to the Institute for Supply Management. However, that growth as well as new orders continued to taper off; it was the third month in a row in which the rate of growth has been slower than the month before.
• American incomes stalled out in June, and what people had they tended to save. According to the Commerce Department, incomes failed to grow for the first time since last July. However, the savings rate hit its highest level in over a year--6.4% of income--while consumer spending flatlined.

Eye on the Week Ahead

In light of one Federal Reserve Board official's recent warning about the potential for an extended period of deflation, the Fed's announcement Tuesday will be closely watched for any hints at possible new quantitative easing measures. So will inflation data at the end of the week, which will have a bearing on any future Fed moves. Retail sales also will be a focus, with overall July sales data and several major retailers' second-quarter earnings reports on tap.

Key data releases: Federal Reserve Board announcement, productivity/labor costs (8/10); international trade (8/11); consumer inflation, retail sales (8/13).

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--

---

	What You Should Know about Trusteed IRAs The tax code allows IRAs to be created as trust accounts, custodial accounts, and annuity contracts. The same tax rules apply, regardless of how the IRA is structured. But the form can have a significant impact on how your IRA is administered. This article will focus on "trusteed IRAs," also known as individual retirement trusts (or IRTs).
	More Details

---

	Ways to Trim College Costs How can students and parents avoid the "extreme borrowing" phenomenon that can lead to years of burdensome loan payments? They can start by looking for ways to trim college costs so they won't have to borrow and/or pay as much in the first place. Here are some ideas.
	More Details

---

Avoiding Probate: Is It Worth It? When you die, your estate goes through a process that manages, settles, and distributes your property according to the terms of your will. This process is governed by state law and is called probate. Usually, everything goes smoothly during the probate process as long as the executor does what needs to be done in a timely fashion and there are no family squabbles. Nevertheless, some people may want to avoid this process.

More Details

---

	What is a rewards program? Offered by merchants of all types, rewards programs are marketing tools that encourage brand loyalty purchasing through price discounts, bonus points and/or coupons toward future purchases, donations to your favorite charity, and even cash rebates. If you're part of the program, you access it by using a membership card that looks like (and often is) a credit card.
	More Details

	How can I reap the most from a rewards card? As you sow, so may you reap. To reap the most from a credit card rewards program, here are some things to consider.
	More Details

Week in Review: Investors remain cautious in face of conflicting data

U.S. economic news

Employment falls more than expected; unemployment rate steady at 9.5%
Employment fell more than expected in July as the economy shed 131,000 jobs; the unemployment rate held steady at 9.5%. The numbers are another sign that the economic recovery may be losing momentum. Nonfarm payrolls fell last month because the rise in private-sector employment was not enough to make up for the government jobs lost.


U.S. service sector growth picks up; manufacturing growth slows
The Institute for Supply Management reported that U.S. service sector growth picked up in July. Service companies have expanded every month this year, but the sector continues to grow at a less robust pace than in the manufacturing sector. Its slow recovery has put a damper on overall hiring because it accounts for 80% of U.S. employment. Despite its strong recovery to date, growth in manufacturing slowed in July.


Retail sales rise but fall short of expectations
Retail sales at U.S. chain stores rose 2.9% in July, falling short of forecasts, as markdowns failed to inspire consumers.

U.S. and global corporate news

European banks post solid profits
HSBC's reported pretax profit more than doubled to $11.1 billion in the first half, while BNP Paribas posted a 31% increase in net income as provisions for bad loans dropped. Barclay's posted a 29% increase in net profit, but costs soared and revenue fell at Barclay Capital's investment banking unit. Société Générale's earnings more than tripled as strong retail operations and lower provisions helped offset a weaker investment banking business. American International Group swung to a $2.7 billion net loss for the second quarter because of charges associated with a unit that is being sold. That loss compares with a $1.8 billion net profit a year ago. Still, the company's insurance business generated an operating profit.


Toyota raises forecast; Rio Tinto profits more than triple
Toyota Motor raised its profit forecast for its fiscal year and posted its highest quarterly net profit in two years after it was able to improve its U.S. finance division and reduce costs. Rio Tinto's profits more than tripled in the first half, and the company made plans to increase output in Australia and Africa.
Newsweek sold; Barnes and Noble on block


The Washington Post Company agreed to sell the 77-year-old Newsweek magazine to stereo tycoon Sidney Harman. Barnes and Noble put itself up for sale as digital books eroded its traditional business.

Global economic news

Global manufacturing activity slows
Growth in manufacturing activity slowed in many of the world's major economies in July; the weaker pace indicates that factories will not be the strong driver of growth that they were earlier in the year. Growth slowed in a large portion of Asia, with China's manufacturing activity expanding at the slowest pace in 17 months amid tightening measures and uncertain global demand. In Europe, however, activity strengthened.


ECB and BOE keep rates steady
The European Central Bank and Bank of England kept their main interest rates unchanged this week. ECB President Jean-Claude Trichet said Europe is recovering faster than forecast and money markets are improving. Markets saw these remarks as an indication that the ECB is looking for ways to phase out liquidity tools put in place to fight the financial crisis.


Wheat prices rise after Russia bans exports
Wheat futures prices in Europe and the United States soared to their highest levels in 23 months after Russia said it would ban grain exports because of a severe drought. That move has heightened concerns about global supplies of grain and the possible impact on food prices. Russia's troubles are all the more problematic because many of the world's wheat exporters have also experienced crop problems. Canada has been hit with heavy rains, Australia has battled locusts, and part of the wheat-growing region in the European Union has, like Russia, been hit by drought.


Greece hits austerity targets
Greece met European Union and International Monetary Fund austerity targets, but monitors warned of overspending at local levels.

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--

Summary of New Consumer Protection Act

Summary of the Provisions of Dodd-Frank Wall Street Reform and Consumer Protection Act - July 27, 2010

On July 21, 2010, President Obama signed into law the most wide-ranging reform of the U.S. financial system in decades. The Act establishes new consumer protection provisions regarding lending and credit. It also attempts to provide greater transparency and accountability for investments and financial services, and establish processes to deal with systemic financial emergencies. For a brief summary of the Act, see: Forefield Update: Financial Reform: The Dodd-Frank Wall Street Reform and Consumer Protection Act

We've created a new Text Client Alert that summarizes some of the provisions in the Act. Just click the link below. Watch for our Flash Client Alert, coming very soon. Text Client Alert: Summary of New Financial Reform Law

Week in Review: U.S. stocks lose ground as data show slower-than-expected U.S. growth

U.S. economic news


U.S. economy slows; government says recession worse than believed
The U.S. economy slowed in the second quarter as growth rose at an annualized rate of 2.4%. The expansion was supported to a greater degree by business investments and exports than by consumer spending, which continued to play a smaller role in the recovery. For instance, business spending increased 21.9%, while consumer spending rose only 1.6%. In the first quarter, the economy grew by 3.7%.

The U.S. Department of Commerce reported that the recession was deeper, and subsequent recovery slower, than earlier estimated. The government revised downward its earlier estimates of gross domestic product for seven of the 12 quarters of 2007, 2008, and 2009, primarily because consumer spending grew more slowly and homebuilding fell more sharply than previously estimated. The overall depth of the most recent recession surpassed any other since the late 1940s. GDP fell by 4.1% between the fourth quarter of 2007, when the recession officially began, and the second quarter of 2009, when many economists believe it ended. The previous estimate for the overall decline was 3.7%.


Better-than-expected U.S. home prices
Home prices rose in May but were expected to lose momentum with the expiration of federal tax credits.


U.S. labor market slow to improve; consumer confidence falls
The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week. Claims dropped 11,000, while the number of people receiving unemployment benefits rose. Amid these still-weak job markets and pessimism about business conditions in the coming months, the Conference Board said its Consumer Confidence Index fell to 50.4 in July, the second consecutive monthly decrease.

U.S. global and corporate news


Basel team moves to define capital
International regulators and central bankers participating in the Basel Committee on Banking Supervisions agreed on key aspects of new global standards aimed at constraining risk at the world's largest banks. Details on what counts as capital were ironed out. Limits were placed on the degree to which banks can count assets such as deferred taxes, mortgage serving rights, and minority interest toward minimal capital levels. That limitation will effectively force banks to reinforce their balance sheets with common equity.


Oil producers post impressive results
Higher energy prices and stronger refining markets helped buoy earnings at oil producers in the second quarter. Exxon's earnings jumped 91% as commodity prices rose and refining profits and production surged. Royal Dutch Shell posted a 15% rise as oil and gas production rose 5% and a restructuring aimed at trimming costs was completed early. Chevron's earnings more than tripled as the oil company benefited from increased production and prices as well as a stronger market for refined products. French oil company Total posted a 43% increase in profits on the back of stronger production, higher oil prices, and a stronger dollar.


Sony announced strong quarterly results and a more bullish full-year outlook. The company raised its full-year profit forecast 20%. Meanwhile, Panasonic revised its projection by 70%. Both companies posted first-quarter earnings that exceeded analysts’ estimates.


Merck reported a 50% decline in second-quarter profits as merger-related and restructuring costs offset a near doubling in sales, resulting from its takeover of Schering-Plough. That profit still beat analysts' expectations.

Global economic news


Eurozone's economic prospects improve
European confidence in the economic outlook rose in July to the highest level in more than two years, and German unemployment declined for a thirteenth month as exports sustained a recovery in the region. Growth in Europe's services and manufacturing industries accelerated in July.


U.K. consumer confidence falls
U.K. consumer confidence fell more than forecast in July as the prospect of government spending cuts undermined optimism on economic recovery. An index of sentiment released by the market research firm GfK NOP fell to its lowest level in 11 months.


India's central bank raises rates
India's central bank raised interest rates more than anticipated in a move to quell double-digit inflation.


Japan's recovery still mixed
Japan's factory output slid 1.5% in June from the previous month, and its jobless rate rose to 5.3%, the highest level since November.

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.
Please check with your compliance deptartment before distributing to clients.


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: July 26, 2010

The Markets

Domestic equities put in a strong week, led by the small caps. Despite all the flip-flops in the indexes this summer, the Dow and NASDAQ are now roughly flat for the year. The S&P 500 is slightly negative for 2010, though it managed to edge above the 1100 mark last week, and the Russell 2000 is slightly ahead for the year.

Market/Index	2009 Close	Prior Week	As of 7/23	Week Change	YTD Change
DJIA	10428.05	10097.90	10424.62	3.24%	-0.03%
NASDAQ	2269.15	2179.05	2269.47	4.15%	0.01%
S&P 500	1115.10	1064.88	1102.66	3.55%	-1.12%
Russell 2000	625.39	610.39	650.65	6.60%	4.04%
Global Dow	1984.48	1788.16	1837.81	2.78%	-7.39%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	2.96%	3.02%	6 bps	-83 bps

Last Week's Headlines

• Federal Reserve Chairman Ben Bernanke sent the stock market into a tailspin by saying that though the Fed expects moderate growth in 2010, the economic outlook remains "unusually uncertain." Though it's reluctant to take new steps to support the economy, he said, the Fed has several options for taking further action if necessary.
• Sales of existing homes fell by 5.1% in June, according to the National Association of Realtors®, though they were 9.8% higher than a year ago. The inventory of unsold homes represented almost a nine-months supply. The Census Bureau said residential housing starts also were down 5% in June, and 5.8% lower than June a year ago. Though building permits were up 2.1%, single-family permits were down even more.
• All but seven of 91 European banks that underwent stress tests to determine their vulnerability passed the tests, indicating that they had access to enough capital to weather harsher economic conditions. The Committee of European Bank Supervisors said five of the seven that failed were in Spain.
• A government review of executive pay at 17 banks that accepted government assistance during the financial crisis called the $1.6 billion worth of compensation under scrutiny "ill-advised." However, pay czar Kenneth Feinberg did not insist that such bonuses and retention awards be returned.
• The Conference Board's Index of Leading Economic Indicators dropped 0.2% in June. Though officials said the index is pointing toward slower growth in the fall, it's still 4.5% higher than at its previous peak before the recession began.
• Treasury Secretary Timothy Geithner said tax cuts for top earners will be allowed to expire on schedule at the end of 2010 as part of the Obama administration's effort to bring down the budget deficit.

Eye on the Week Ahead
The tension between economic data on one side and earnings reports on the other will continue. This will be European equities' first chance to react to the results of bank stress tests released last Friday, and the end of the week sees the first estimate of second-quarter Gross Domestic Product.

Key data releases: New home sales (7/26); home prices, consumer confidence (7/27); durable goods orders (7/28); preliminary Q2 GDP, consumer sentiment (7/30).

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: Volatile market responds to mixed economic, earnings news

U.S. economic news

U.S. home sales decline
Sales of existing homes in the United States slid by 5.1% in June, in the aftermath of a government tax credit program that ended in April. Year over year, existing home sales rose 9.8% in June. Housing starts also dropped 5.0% in June, to a seasonally adjusted 549,000, the U.S. Department of Commerce reported.

Weekly jobless claims rise
Initial claims for unemployment benefits jumped 37,000 to 464,000 in the week ended July 17. The four-week moving average, which smoothes volatility and can give a better view of the overall trend, rose 1,250 to 456,000.

Wages lag inflation for year
Weekly wages for U.S. workers failed to keep up with the pace of inflation over the past year, according to a report issued by the U.S. Department of Labor. Median weekly earnings rose to $740, from $734 a year earlier, an increase of 0.8%, while the Consumer Price Index climbed 1.8%.

U.S. and global corporate news

Caterpillar’s profits, sales pick up
Strong sales by industrial company Caterpillar drove a 91% increase in profits as dealers restocked their inventories of heavy machinery amid a pickup in demand for construction equipment in Asia and North America.

UPS delivers much larger profit
In an indication of a healthy resumption of economic activity, package shipper United Parcel Services reported a 90% rise in earnings and revenue growth of 13%, driven by Asian trade flows and a moderate U.S. economic recovery. UPS and its rival FedEx are seen as key barometers of international trade flows.

Ford’s new focus pays off
Automaker Ford reported a 13% increase in second-quarter earnings as its strategy to trim the number of cars and trucks it makes and to offer more features and charge higher prices paid off. A turnaround in Ford’s North American operations was key, as the group turned in a pretax profit of $1.9 billion, reversing an $899 million loss a year earlier. This was Ford’s fifth consecutive quarterly profit and its best earnings report in six years.

3M earnings rise
Manufacturer 3M posted a 43% rise in earnings as its sales rebounded to prerecession levels, benefiting from new products along with a growth in demand in emerging markets and in its niches in automotive manufacturing and consumer electronics.

Apple profit soars
Computer and consumer electronics firm Apple recorded a 78% surge in profit on very strong sales growth, including early sales of its iPad tablet computer and its latest version of the popular iPhone. Apple’s sales revenue for the quarter rose 61%.

Nokia hurt by smartphone competition
Nokia reported a 40% decline in second-quarter profit. The world’s largest mobile-phone maker had its hands full as rival Apple’s iPhone ate away at its market share in the high-end segment.

Roche profit jumps 58%
Swiss firm Roche Holding, the world’s largest maker of cancer medicines, reported a sharp rise in profits for the first half of its year because of healthy drug sales and robust growth in the sales of the company’s cancer-fighting drugs.

Xerox earnings jump 62%
Printer and copier maker Xerox posted a 62% increase in profits, surpassing expectations on improving demand in developing markets and from small and midsized businesses. The company reported growth in all business segments.

Global economic news

European bank stress test released
All eyes were on Europe this week, as the long-awaited stress tests for 91 European banks were released Friday. The stress test results were met with initial skepticism over whether they were rigorous enough, and the tests themselves may have failed to ease uncertainty about the health of the European banking industry. All but seven of the 91 banks passed the test. The seven included five Spanish banks, one German bank, and one Greek bank. This was better than the market’s expectation that about 90% of banks would pass, as reported in The Wall Street Journal. Banks that fail the test will need to raise money from investors or governments. Most observers believe the amount of capital raised will leave banks adequately funded.

Eurozone economic activity picks up
Activity picked up in both the manufacturing and service sectors in the eurozone, according to a survey by financial information firm Markit. The preliminary composite Purchasing Managers Index (PMI) rose to 56.7 from 56.0 in June. The manufacturing and services PMIs both rose and had been expected to decline. Meanwhile, the euro has risen about 8% against the U.S. dollar in recent weeks, reflecting increased confidence in this regional economy. However, the euro’s rise makes exports from Europe more expensive in global markets.

U.K. economy grows for third straight quarter
The U.K. economy grew 1.1% from the first to the second quarter this year, and it grew 1.6% when compared with the second quarter of 2009. This is the third consecutive quarter of U.K. economic expansion after a deep recession and the fastest pace of growth since the first quarter of 2006.

German business confidence hits three-year high
German business confidence turned strongly higher in July, registering a leap of 4.4 points to 106.2 in the Ifo compound index. Economists polled by Dow Jones Newswires had expected a decline to 101.5. Business confidence in Germany is now at its highest since 2007, and the increase in confidence was the greatest since German reunification in 1990.

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: July 19, 2010

The Markets

After inching forward most of the week, domestic equities were felled Friday by a combination of options expirations, a surprisingly negative consumer sentiment report, and lackluster economic data.

Market/Index	2009 Close	Prior Week	As of 7/16	Week Change	YTD Change
DJIA	10428.05	10198.03	10097.90	-.98%	-3.17%
NASDAQ	2269.15	2196.45	2179.05	-.79%	-3.97%
S&P 500	1115.10	1077.96	1064.88	-1.21%	-4.50%
Russell 2000	625.39	629.43	610.39	-3.02%	-2.40%
Global Dow	1984.48	1794.46	1788.16	-.35%	-9.89%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.85%	3.07%	2.96%	-11 bps	-89 bps

Last Week's Headlines

• The devil is in the details: Congress gave final approval to what is being called the most sweeping financial reform legislation since the Great Depression. The legislation is designed to help prevent problems that led to the 2008 financial crisis from recurring. However, much of its impact will be determined by regulations that will be developed over the next year or so.
• Consumer inflation fell 0.1% in June, putting the annual inflation rate at 1.1%. The Bureau of Labor Statistics said energy costs, which fell 2.9%, were responsible for most of the decline.
• Inflation at the wholesale level also fell in June, for the third straight month, according to the Bureau of Labor Statistics. The drop of 0.5% followed declines of 0.3% and 0.1% in May and April respectively. Prices for raw materials fell the most, by 2.4%. Most of the 0.5% decline in finished products resulted from a drop in consumer food costs, which fell 2.2%.
• Despite falling oil prices, the U.S. trade deficit grew almost 5% in May, according to the Census Bureau. Increased imports from China accounted for a large part of that; the deficit with China alone rose more than 15% from April's figure. Though exports rose, imports rose even more.
• Retail sales were down for the second month in a row in June, according to the Commerce Department. However, if auto and gas sales are excluded from the total, sales actually rose 0.1% instead of falling 0.5%.
• The Federal Reserve Board lowered slightly its estimate of U.S. growth for the rest of the year to 3%-3.5% instead of the previous 3.5%-3.7%. Translation: don't look for higher interest rates in the near future.
• The Thomson Reuters/University of Michigan index of consumer sentiment fell dramatically in July, from 76 in June to 66.5. That's the lowest level since last August.
• Goldman Sachs agreed to pay $550 million to settle civil charges of fraud filed by the SEC. The company, which reported net earnings of $3.46 billion in Q1 2010, admitted its marketing materials for the securities in question "contained incomplete information." According to the terms of the settlement, $250 million will go to injured investors and $300 million to the U.S. Treasury. Goldman also agreed to review its business practices and training of employees.

Eye on the Week Ahead

Housing data will indicate the extent to which the first-time homebuyer's tax credit accelerated purchases. Second-quarter earnings reports from several consumer and tech bellwethers also are on deck, as are the results of the stress tests on European banks, scheduled to be released Friday. Finally, Fed Chairman Ben Bernanke will testify before Congress about the state of the economy.

Key data releases: Housing starts (7/20); home resales, leading economic indicators (7/22).

--see disclaimer below--

Week in Review: Stocks erase gains as earnings season, economic data fail to impress

U.S. economic news

Fed downgrades U.S. growth assessment
U.S. Federal Reserve Board officials downgraded their expectations for the U.S. economy and said that more central bank action might be necessary if economic conditions were to worsen appreciably. Fed officials said they expect growth to be slower this year than previously expected and inflation to remain subdued through 2012. They also estimated the job market would continue to deteriorate through 2012.

Inflation muted
U.S. inflation remained muted in June; but the core measure that excludes the volatile food and energy prices posted its largest gain since October 2009. The seasonally adjusted consumer price index slid 0.1% last month after a decline in energy prices. Core consumer prices, which are closely watched by the Fed, were up 0.2% as prices for apparel, medical care, and cigarettes rose.

U.S. data shows U.S. economic recovery losing momentum
The recovery in U.S. manufacturing lost momentum in July, according to various surveys. The news intensified fears about the health of the U.S. economy. The Philadelphia Fed index of manufacturing fell, as did the New York Fed's Empire State index. The data suggest that manufacturing is still growing but not fast enough to create many jobs. That being said, the number of people filing for unemployment insurance fell by a seasonally adjusted 29,000 to 429,000 for the week ended July 10.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell more than expected in July as it reached the lowest level in a year. A lack of confidence could further restrain consumer spending, which accounts for 70% of the economy, and limit the speed of the economic recovery.
U.S. exports rose 2.4% in May from April, and imports increased by a stronger 2.9%, pushing the U.S. trade deficit to its widest level in 18 months. The worse-than-expected deficit prompted some economists to lower their U.S. growth estimate as the deficit suggests that the U.S. produced less than had been anticipated.
Retail sales fell in June, one month after businesses began increasing inventories to put more products on their shelves. Typically inventories grow during a recovery as businesses prepare for more sales.

U.S. and global corporate news

BofA and Citigroup beat earnings estimates
Bank of America beat estimates as pressure from overdue loans abated and the company benefited from lower credit costs and the sale of noncore assets. Profits increased 3.1% for the quarter even as revenues declined. Citigroup's profit dropped 38% as stock and bond trading revenue fell but still beat analysts' estimates.

GE ends nine-quarter losing streak
General Electric's profit rose 14% in the April-to-June period, ending a nine-quarter losing streak. The company benefited from the stabilization of its GE Capital unit and improvements in its health care division.

Mattel's profits more than double
Mattel's profits more than doubled as sales and margins improved, but the toy company's results still fell short of expectations.

Intel and Google underline tech recovery
Intel swung to a profit of nearly $3 billion as sales soared 34%. Google's earnings missed estimates even though its profits and revenues increased amid a broad recovery in online advertising. However, its search business showed signs of slowing growth.

Global economic news

Chinese economy slows
China's economic growth rate slowed to 10.3% in the second quarter as government efforts to cool the housing markets and infrastructure investment took hold. Housing prices in China fell in June for the first time in 16 months, marking a long-awaited turnaround in the nation's overheated market.

Moody's downgrades Portugal
Moody's downgraded Portugal's debt rating two notches to A1 and cited the weak growth and climbing debt levels as the cause.

Eurozone posts larger-than-expected deficit
The eurozone posted a larger-than-expected trade deficit in May as imports rose more than exports. The deficit was €3.4 billion compared with a €300 million surplus in April. The figures show that trade flows involving eurozone nations have picked up sharply from last year, when flows seized up in response to the financial crisis and global recession. However, the deficit suggests that trade may not make a large contribution to eurozone growth despite the weakness of the euro.

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--

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--