Week in Review: Volatile markets respond to mixed economic messages

Global economic news

U.S. inflation above 3%U.S. consumer prices rose a seasonally adjusted 0.4% in April from March, the U.S. Department of Labor reported, with the core consumer price index ─ excluding food and energy ─ climbing just 0.2% for the month. Year over year, prices rose 3.2%, the largest 12-month gain since October 2008. Core inflation has risen just 1.3% since April 2010. Gasoline prices jumped 3.3% in April and more than 33% over the past year.

Producer prices also rose in April, a seasonally adjusted 0.8% increase after a 0.7% increase in March. Core prices, stripping out food and energy components, climbed 0.3% in both months.

Consumer sentiment upThe University of Michigan-Thomson Reuters preliminary consumer sentiment index climbed to 72.4 for May from 69.8 in April. The increase surpassed economists’ expectations of a 71.0 reading.

Inflation rises in China, GermanyChina and Germany both reported an increase in consumer-price inflation in April. In China, the consumer price index rose 5.3% last month from a year earlier after a 5.4% rise in March. Food prices were 11.5% higher annually. China’s government responded swiftly, raising bank reserve requirements for the eighth time since last October. China’s largest lenders must now keep a record 21% of their assets in reserve. German consumer prices were 2.4% higher in April than a year earlier, driven mainly by energy prices.

Import prices higher in U.S.U.S. imports cost 2.2% more in April than March, according to the U.S. Department of Labor. Higher prices for imports of commodities, including oil, metals, and grains, were the key factor. Import prices rose 11.1% from April 2010, behind a 36.8% surge in petroleum import prices.

Chinese trade surplus, U.S. trade deficit both growChina’s trade surplus grew to 11.43 billion in April, according to the country’s General Administration of Customs. While imports rose 22% from a year earlier, the country’s exports increased by almost 30%. The larger-than-expected surplus may add pressure on China to allow its yuan currency to appreciate more quickly.

The U.S. trade deficit widened in March, rising 6.0% from February to $48.18 billion, the U.S. Department of Commerce reported. While exports grew to a record, surpassing $172 billion, imports climbed to more than $220 billion. The U.S. trade deficit with China shrank slightly in March.

U.S. retail sales riseU.S. retail sales rose by 0.5% in April from the previous month, the U.S. Commerce Department reported, slightly lower than economists’ expectations. March sales were revised to a 0.9% increase from the initial estimate of 0.4%. Rising energy prices were a large component of the increase.

U.S. first-time jobless claims easeThe number of Americans filing first-time claims for unemployment insurance fell 44,000 in the week ended May 7. Applications totaled 434,000. The four-week average rose by 4,500 to 436,750.

S&P downgrades Greek debtStandard & Poor’s lowered its rating on long-term Greek government debt to "B" from "BB-." S&P said Greece might have to resort to a partial debt default. Greece’s debt is now rated lower than that of Angola, Senegal, Nigeria, and Zambia.

Economies in France, Germany surpass expectationsThe eurozone’s two largest economies, Germany and France, both grew more than forecast in the first quarter of 2011. The German economy expanded 1.5% over the fourth quarter of 2010, while economic activity in France was 1% greater than in the previous quarter. Overall economic output in the eurozone grew 0.8% in the first quarter.

Industrial output falls in Eurozone, rises in UKEurozone industrial production fell in March, as Germany, Italy, France, and other countries experienced slower growth. It was the first such decline in activity for the Eurozone in six months. U.K. industrial production grew in March, but at a slower rate than expected. The U.K. Office for National Statistics reported that industrial production rose 0.3% in March from February and 0.7% on an annual basis.

Global corporate news

Microsoft to buy SkypeMicrosoft announced its plan to purchase Skype, the Internet telephone company that provides free online video and voice communication. The stunning announcement is seen as an indication that the powerhouse software firm plans to expand into the mobile phone and Internet markets.

A year-long car rental company takeover battle is finally being resolved, as Hertz announced it will offer Dollar Thrifty shareholders $72 a share, significantly higher than the $42 a share originally offered a year ago April, before a bidding war last summer between Hertz and Avis resulted in a stalemate.

Buybacks make comebackCorporate share buybacks resumed, with Philip Morris and AT&T among the firms taking advantage of favorable borrowing conditions after holding onto cash since the financial crisis began in late 2008.

Toyota profit plungesToyota Motor announced a 77% decline in its quarterly net profit and gave no annual forecast, as it continued to struggle in assessing the scope of disruption to its production following Japan’s March 11 earthquake. Toyota is expected to fall behind General Motors and possibly Volkswagen to the third position in global vehicle sales in 2011.

Nissan posts profitNissan Motor said it turned a profit in its fiscal fourth quarter, swinging to net earnings of 30.8 billion yen ($380 million) from a loss of 11.6 billion yen in the same quarter a year earlier. Japan’s second-largest carmaker by volume grew sales by 10%, and its operating profit rose 7.2% from a year earlier. While Nissan was affected by the Japanese earthquake, it was not hit as hard as Toyota and Honda, and its factories in Japan and North America have recovered more quickly from damage and supply interruptions.

NEC earnings dropNEC reported a 36% drop in net profit for its fiscal fourth quarter and a full-fiscal-year net loss, as the impact of the March 11 earthquake and tsunami compounded existing weakness in NEC’s technology-services business.

Disney disappointsThe Walt Disney Company’s quarterly earnings fell shy of expectations and last year’s results as revenues dropped in its studio entertainment and parks and resorts segments.

Cisco earnings dropCisco Systems reported a decrease of 18% in earnings for its fiscal third quarter. The networking equipment giant faces tough competition and a slowdown in its core routing and switching businesses. Cisco also lowered its guidance for its fourth quarter.

Citigroup executes reverse stock splitA 1-for-10 reverse stock split of Citigoup common stock, announced in March, was carried out this week, reducing the number of outstanding shares of Citigroup common stock to 2.9 billion from roughly 29 billion. Price per share went from $4 to above $40. Citigroup said it aims to reduce volatility and broaden its base of potential investors. Some institutional investors are barred from buying shares with single-digit prices.

RBC retreats from U.S. bankingIn a dramatic about-face, Royal Bank of Canada is giving up on its long-term quest to establish a strong presence in the U.S. banking industry and is seeking buyers for its U.S. operation, known as RBC Bank. RBC’s move to retrench stands in contrast to its Canadian rivals, Bank of Montreal and Toronto-Dominion Bank, and their recent large acquisitions.

The week ahead

• Earnings reports are due to be released by Dell, Home Depot, Wal-Mart, Deere & Co, and Hewlett-Packard.
• The U.S. Commerce Department releases its data on housing starts and building permits on Tuesday, May 17.
• The U.S. Federal Reserve Board reports on industrial production on Tuesday, May 17.
• The ZEW Indicator of Economic Sentiment in Germany is released on Tuesday, May 17.
• The U.S. Labor Department reports on initial jobless claims on Thursday, May 19.

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--

Week in Review: Commodities plunge as investors question global recovery

Global economic news


U.S. economic reports point to recovery woesEconomic news in the United States this week continued to underline the struggles the U.S. economy faces as it recovers. U.S. companies added more jobs than expected in April, even as the unemployment rate rose for the first time in five months. The private sector posted the strongest employment gains in five years as nonfarm payrolls rose by 244,000. The unemployment rate rose to 9% from 8.8% in March. That monthly jobs report came one day after news that applications for jobless benefits unexpectedly jumped more than expected last week. That increase was partially the result of auto shutdowns caused by the disaster in Japan. Other reports also pointed to the pressures on recovery. U.S. consumer confidence fell to a five-week low as the highest gas prices in five years negatively affected Americans' attitudes toward spending.


Manufacturing recovery losing momentumThe Institute for Supply Management's gauge of factory activity edged lower in April to 60.4 from 61.2; any reading above 50 indicates expansion. The report showed production growth and a rising backlog of orders and suggested that supply chain woes resulting from problems in Japan are affecting U.S. manufacturers. Also in April, manufacturing in the United Kingdom fell unexpectedly to a seven-month low amid declining consumer confidence and falling construction orders. In Russia, manufacturing suffered its largest monthly drop since December 2008 after export orders fell and companies scaled back investment.


Inflation concerns mount globallyAround the world, inflation concerns were front and center. The Organization for Economic Cooperation and Development reported that consumer prices in developed economies rose in March at the fastest pace since October 2008. The price increases were driven by faster energy and food inflation. Prices in the OECD's 34 member countries rose by 2.7% for the 12 months ended in March. The core inflation rate, which excludes volatile food and energy, rose to 1.4% in March from 1.3% in February.


Inflation concerns have prompted central banks to tighten monetary policy. The Reserve Bank of India raised rates for the ninth time since March 2010. Central banks in the Philippines, Malaysia, and Vietnam also lifted borrowing  costs, and China's central bank, in its first-quarter monetary policy report, affirmed that controlling inflation is its top priority, even after its manufacturing survey slid in April from March, an indication that growth may slow.


ECB, BOE, and Royal Bank of Australia leave rates unchangedThe European Central Bank left rates unchanged as it tried to balance the challenges of its weaker members with its inflation concerns. In the United Kingdom, the Bank of England kept its benchmark rate at a record low amid signs that its recovery is faltering. The Reserve Bank of Australia also left its benchmark interest rate unchanged for a fifth-straight meeting as a record-low Australian dollar helps contain inflation pressures.


U.S. banks more willing to lendThe U.S. Federal Reserve Board's quarterly senior loan officer survey released Monday showed that the willingness of banks to lend money to consumers rose more than it has in 17 years. Consumer demand for loans remained spotty, however, and that slack demand has capped banks' top-line revenue growth. In stark contrast to the U.S. report, a survey of senior lending officers of 45 emerging market banks found that banks report strong and growing demand for loans from consumers and businesses. The first-of-its-kind survey was conducted by the Institute of International Finance, a global association of large banks.


Portugal agrees to bailoutTo help its ailing economy, Portugal agreed to a three-year €78 billion financial bailout program with the European Union and International Monetary Fund.


U.S. becomes fuel exporterThe United States became a net exporter of fuel for the first time in nearly 20 years. U.S. refiner product exports rose 24.4% in the first quarter of 2011 from a year ago, while imports declined 14.4%, according to the American Petroleum Institute.

Global corporate news

Automakers report strong resultsProfits at General Motors tripled on stronger vehicle demand and on gains from the sale of stakes in two of its subsidiaries. Chrysler swung to a quarterly profit as vehicle sales increased dramatically in the first quarter. This is the first profitable period the automaker has had since mid-2006, when it was part of DaimlerChrysler AG.


Marsh & McLennan's first-quarter earnings rose 31% on better-than-expected revenue growth, driven by its risk and insurance and consulting businesses.

The week ahead

• The U.S. Department of Labor reports its producer price index on Thursday, May 12, and its consumer price index on Friday, May 13.
• The Thomson Reuters/University of Michigan index of consumer sentiment is released on Friday May 13.
• Eurostat releases reports on eurozone first-quarter gross domestic product on Friday, May 13.
• Japan's Ministry of Finance releases trade data on Friday, May 13.

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

-see disclaimer below--

Week in Review: Commodities plunge as investors question global recovery

Global economic news

U.S. economic reports point to recovery woesEconomic news in the United States this week continued to underline the struggles the U.S. economy faces as it recovers. U.S. companies added more jobs than expected in April, even as the unemployment rate rose for the first time in five months. The private sector posted the strongest employment gains in five years as nonfarm payrolls rose by 244,000. The unemployment rate rose to 9% from 8.8% in March. That monthly jobs report came one day after news that applications for jobless benefits unexpectedly jumped more than expected last week. That increase was partially the result of auto shutdowns caused by the disaster in Japan. Other reports also pointed to the pressures on recovery. U.S. consumer confidence fell to a five-week low as the highest gas prices in five years negatively affected Americans' attitudes toward spending. 


Manufacturing recovery losing momentumThe Institute for Supply Management's gauge of factory activity edged lower in April to 60.4 from 61.2; any reading above 50 indicates expansion. The report showed production growth and a rising backlog of orders and suggested that supply chain woes resulting from problems in Japan are affecting U.S. manufacturers. Also in April, manufacturing in the United Kingdom fell unexpectedly to a seven-month low amid declining consumer confidence and falling construction orders. In Russia, manufacturing suffered its largest monthly drop since December 2008 after export orders fell and companies scaled back investment.


Inflation concerns mount globallyAround the world, inflation concerns were front and center. The Organization for Economic Cooperation and Development reported that consumer prices in developed economies rose in March at the fastest pace since October 2008. The price increases were driven by faster energy and food inflation. Prices in the OECD's 34 member countries rose by 2.7% for the 12 months ended in March. The core inflation rate, which excludes volatile food and energy, rose to 1.4% in March from 1.3% in February.


Inflation concerns have prompted central banks to tighten monetary policy. The Reserve Bank of India raised rates for the ninth time since March 2010. Central banks in the Philippines, Malaysia, and Vietnam also lifted borrowing  costs, and China's central bank, in its first-quarter monetary policy report, affirmed that controlling inflation is its top priority, even after its manufacturing survey slid in April from March, an indication that growth may slow.


ECB, BOE, and Royal Bank of Australia leave rates unchangedThe European Central Bank left rates unchanged as it tried to balance the challenges of its weaker members with its inflation concerns. In the United Kingdom, the Bank of England kept its benchmark rate at a record low amid signs that its recovery is faltering. The Reserve Bank of Australia also left its benchmark interest rate unchanged for a fifth-straight meeting as a record-low Australian dollar helps contain inflation pressures. 


U.S. banks more willing to lendThe U.S. Federal Reserve Board's quarterly senior loan officer survey released Monday showed that the willingness of banks to lend money to consumers rose more than it has in 17 years. Consumer demand for loans remained spotty, however, and that slack demand has capped banks' top-line revenue growth. In stark contrast to the U.S. report, a survey of senior lending officers of 45 emerging market banks found that banks report strong and growing demand for loans from consumers and businesses. The first-of-its-kind survey was conducted by the Institute of International Finance, a global association of large banks.


Portugal agrees to bailoutTo help its ailing economy, Portugal agreed to a three-year €78 billion financial bailout program with the European Union and International Monetary Fund.


U.S. becomes fuel exporterThe United States became a net exporter of fuel for the first time in nearly 20 years. U.S. refiner product exports rose 24.4% in the first quarter of 2011 from a year ago, while imports declined 14.4%, according to the American Petroleum Institute.

Global corporate news

Automakers report strong resultsProfits at General Motors tripled on stronger vehicle demand and on gains from the sale of stakes in two of its subsidiaries. Chrysler swung to a quarterly profit as vehicle sales increased dramatically in the first quarter. This is the first profitable period the automaker has had since mid-2006, when it was part of DaimlerChrysler AG.


Marsh & McLennan's first-quarter earnings rose 31% on better-than-expected revenue growth, driven by its risk and insurance and consulting businesses.

The week ahead

• The U.S. Department of Labor reports its producer price index on Thursday, May 12, and its consumer price index on Friday, May 13.
• The Thomson Reuters/University of Michigan index of consumer sentiment is released on Friday May 13.
• Eurostat releases reports on eurozone first-quarter gross domestic product on Friday, May 13.
• Japan's Ministry of Finance releases trade data on Friday, May 13.

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

-see disclaimer below--

MARKET WEEK: MAY 2, 2011

The Markets Onward and upward: In a week of tornado carnage and wedding bliss, domestic equities reached new year-to-date highs. The Dow hit a level not seen since May 2008, and the small-cap Russell's gains since March 2009 have now pushed it past its October 2007 high to a new record. Despite solid earnings reports from several major tech companies, the Nasdaq had the weakest weekly performance. Meanwhile, the S&P 500 ended the week north of the trading range it's been in since February.

Market/Index 2010 Close Prior Week As of 4/29 Week Change YTD Change DJIA 11577.51 12505.99 12810.54 2.44% 10.65% Nasdaq 2652.87 2820.16 2873.54 1.89% 8.32% S&P 500 1257.64 1337.38 1363.61 1.96% 8.43% Russell 2000 783.65 845.64 865.29 2.32% 10.42% Global Dow 2087.44 2207.21 2255.22 2.18% 8.04% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 3.42% 3.32% -10 bps 2 bps Last Week's Headlines In a first-ever press conference as well as its regular announcement, the Federal Reserve reaffirmed its plan to end its QE2 bond-buying program as scheduled at the end of June. However, it will continue to support the economy by keeping interest rates low for an extended period despite rising food and gas prices. Fed Chairman Ben Bernanke said the Fed will continue to reinvest the proceeds of existing Treasury holdings for the time being. The Fed also raised its inflation forecasts for 2011 to 2.1% -- 2.8%, closer to its historical average, though it anticipates the inflation rate falling once again in 2012 and 2013. It also forecast an unemployment rate of 8.4% -- 8.7% by the end of 2011, slightly lower than the current 8.8%. Bad weather conditions and higher gas prices helped slow the nation's economic growth during the year's first quarter. Though gross domestic product (GDP) didn't flatline, the Bureau of Economic Analysis' initial estimate of a 1.8% annualized growth rate was lower than the 3.1% seen in the previous quarter. The BEA said reduced governmental spending at all levels and higher imports were major factors in the decline; consumer spending, private inventory investments, exports, and business fixed investment, though weaker than in Q4, were the most positive factors. Better weather helped sales of new homes improve in March. The Commerce Department said sales were up 11.1% from February's dismal number, though they were still down almost 22% from the previous March. Home prices fell 1.1% during February in the 20 cities tracked by the S&P/Case-Shiller index. That left the index down 3.3% from the previous February, almost exactly where it was at its low in April 2009. Durable goods orders rose 2.5% in March. It was the third consecutive month of increases, and much stronger than February's 0.7% rise. According to the Commerce Department, transportation equipment such as planes accounted for roughly half of the gain. Shipments and inventories also were up. Though better than in 2009, Greece's 2010 budget deficit was higher than previously estimated, according to Eurostat. The European Union's official statistical agency said the €24.1 billion deficit represented 10.5% of the country's gross domestic product (GDP), ranking just behind Ireland's 32.4%. Total government debt represented 142.8% of GDP, the worst ratio in the EU. However, the budget deficit of the 17 eurozone countries as a whole decreased from 6.3% in 2009 to 6%, though the ratio of government debt to GDP was up from 79.3% to 85.1%. It was Japan's turn for a negative credit outlook from Standard & Poor's. Though it did not change Japan's AA- credit rating, S&P downgraded its outlook from stable to negative, which suggests the likelihood of a downgrade if financial conditions deteriorate in the wake of the recent multiple disasters. After the Fed's announcement, the dollar continued its recent decline; by week's end it had hit roughly $1.48 versus the euro. Eye on the Week Ahead In light of recent weakening in the weekly unemployment figures, the April figure due on Friday will be of interest. Continuing earnings reports will arm-wrestle a heavy load of economic data for investor attention. Key dates and data releases: U.S. manufacturing, construction spending (5/2); auto sales, factory orders (5/3); services sector (5/4); productivity and labor costs (5/5); unemployment/payrolls (5/6). 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. Equities data reflect price change, not total return. 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 advance on robust profit picture

Global economic news

U.S. Fed to phase out quantitative easingThe Fed announced it would phase out its $600 billion bond-buying program in June. In its first-ever news conference this week, the central bank said it would maintain ultra-low interest rates for the time being.


U.S. gross domestic product up 1.8%U.S. economic growth slowed sharply in the first quarter, to a 1.8% annualized rate, from 3.1% in the last quarter of 2010, the U.S. Department of Commerce reported. Higher prices, especially for gasoline and food, squeezed consumer budgets, winter storms took their toll on economic activity, and a rise in imports reduced the country’s output as well. In addition, the federal government reduced its spending by 7.9%, the sharpest drop in a decade.


U.S. Fed’s inflation gauge rises 3.8%The price index for personal consumption expenditures, the Fed’s key inflation gauge, jumped an annualized 3.8% in the first quarter of 2011. Excluding food and energy items, the price index rose 1.5% during the quarter. The Fed expects the overall inflation measure to climb between 2.1% and 2.8% this year.


U.S. consumer sentiment climbsU.S. consumers were more confident in April than in March, as indicated by a rise in the Thomson Reuters/University of Michigan final index of consumer sentiment to 69.8 from 67.5 in March, which was the index’s lowest level since November 2009. It appears that the improving job market is helping Americans tolerate higher fuel costs.


U.S. jobless claims spikeInitial jobless claims increased unexpectedly by 25,000, to a seasonally adjusted 429,000 in the week ended April 23, the U.S. Department of Labor reported. The four-week average rose by 9,250 to 408,500, marking the first time since mid-February that the average sat above 400,000.


New home sales lag in the United StatesSales of new homes increased by 11.1% in March from February. However, sales were down 21.9% from a year earlier. The median price for a new home sold in March was $213,800, up 2.9% from a month earlier but 4.9% lower than in March 2010. Meanwhile, the Standard & Poor's/Case-Shiller index of property values in 20 cities fell 3.3% from February 2010 to February 2011, underscoring the continued housing market weakness.


Durable goods orders upNew orders for durable goods increased 2.5% in March, the Commerce Department reported. The strength of this report stood in sharp contrast to some other economic reports, and it supports the view that any economic slowdown related to commodity price increases or poor weather could be temporary and brief. The durable goods report pointed to strong growth in a variety of areas, including metals, machinery, computers, software, and automobiles.


Japanese industrial output plummets after earthquakeThe impact of the March 11 earthquake and tsunami was very clear in the country’s report on industrial production in March. According to the Ministry of Economy, Trade, and Industry, output at factories and mines dropped by 15.3% in March from February, the largest monthly decrease since the government began collecting this comparative data in February 1953. In its semiannual report, the Bank of Japan curbed its forecast for growth in real gross domestic product to 0.6% for this year, down from 1.6% in a January forecast. It predicts a strong rebound in 2012, however, to 2.9% growth.


Eurozone inflation up a notch in AprilEuropean inflation reached its fastest pace in more than two years, rising at a 2.8% annualized pace, up from 2.7% in March, according to an initial estimate released by the European Union’s statistics office. An index of executive and consumer sentiment fell to 106.2 from 107.3 in March, indicating a potential gradual slide in business and consumer confidence. Separately, the Markit Eurozone Retail Purchasing Managers Index eased to 52.2 in April from 53.5 in March but remained above its long-term average.

Global corporate news

Oil giants pump up profitsVery strong first-quarter results indicate the oil industry is poised to enjoy substantial profits in 2011. Exxon Mobil reported a 69% jump in first-quarter earnings, Royal Dutch Shell posted a 60% rise in profits, ConocoPhillips’ first-quarter earnings rose 44%, and Chevron's first-quarter earnings grew 36%. All four benefited from higher oil prices. Exxon and Conoco attributed some of the robust results to strong refining margins. Shell mentioned growth in upstream production and ongoing cost-cutting. Exxon also enjoyed a rise in production volumes, while Conoco achieved its results despite a sharp drop in production. Chevron posted stronger refining margins.


French oil company Total reported a 35% rise in adjusted net profit on higher crude oil and natural gas prices. The firm’s unadjusted net profit was 51% higher than a year earlier.


Automakers post varied resultsGlobal automakers were all over the map in their first-quarter earnings. Ford Motor reported a $2.6 billion quarterly profit, its largest first-quarter profit since 1998. However, Honda Motor said its quarterly earnings fell 38% as it struggled to find enough auto parts to bring factory production above 50% capacity. Honda warned that earnings would remain weak for the next two quarters. Meanwhile, Ford said it idled a manufacturing plant in Taiwan and a South African assembly plant as precautionary moves to help conserve parts.


Volkswagen reported a vastly improved net profit on booming emerging market demand. Mitsubishi Motors posted a 42% decrease in its fiscal fourth-quarter earnings because of the yen’s strength and lower domestic production. Daimler’s profit nearly doubled in the first quarter and its revenue rose by 17%, driven by accelerated demand for luxury cars.


Deutsche Bank reboundsDeutsche Bank had its best first quarter since 2007. The large German bank’s net profit rose 7%, benefiting from its recent acquisition of retail bank Postbank, which helps to diversify Deutsche Bank’s mix of banking businesses.


Microsoft profits up, but Windows sales downDespite sharply rising quarterly profits on robust sales of Office and Xbox, Microsoft reported a decline in the sales of its Windows operating system as demand for traditional personal computers weakened because of competition from tablet devices.


Caterpillar soars on emerging market salesCaterpillar, the world’s largest construction equipment maker, surpassed first-quarter earnings estimates on surging sales in developing countries. Net income was more than five times higher than a year earlier, while sales climbed 57%.


Merck tops estimates on cost-cutting, higher salesMerck, the second-largest U.S. pharmaceutical firm, posted a higher-than-estimated first-quarter profit, benefiting from cost reductions and rising sales of its Januvia diabetes pill, which more than offset revenue losses to generic competition.

The week ahead

• Among companies scheduled to release first-quarter earnings are Pfizer, Marathon Oil, Comcast, MasterCard, MetLife, and News Corp.
• The ADP monthly employment report is released Wednesday, May 4.
• Germany’s manufacturers' orders report is released Thursday, May 5.
• The U.S. monthly nonfarm payroll report is released Friday, May 6,
• The U.K. producer price index is released Friday, May 6.

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

-see disclaimer below--

Market Week: April 25, 2011

The Markets Take that, S&P: Domestic equities rebounded from a downdraft that followed Standard & Poor's warning about U.S. debt, ending the holiday-shortened week with solid gains. Buoyed by some positive corporate earnings, the S&P 500 made another run at 1340 but remained in the trading range of roughly 1300-1340 that it's been in since early February. The Dow ended the week at its highest level in almost three years and took the lead from the small-cap Russell 2000 in the year-to-date performance sweepstakes. Treasury bonds also seemed to thumb their noses at the S&P warning. Ten-year Treasury yields ended the week basically flat; in fact, the Treasury had to set a minimum positive coupon rate for an auction of five-year Treasury Inflation-Protected Securities (TIPS), which had been trading in the secondary market with a negative yield.

Market/Index 2010 Close Prior Week As of 4/22 Week Change YTD Change DJIA 11577.51 12341.83 12505.99 1.33% 8.02% Nasdaq 2652.87 2764.65 2820.16 2.01% 6.31% S&P 500 1257.64 1319.68 1337.38 1.34% 6.34% Russell 2000 783.65 834.98 845.64 1.28% 7.91% Global Dow 2087.44 2177.52 2207.21 1.36% 5.74% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 3.43% 3.42% -1 bps 12 bps Last Week's Headlines Standard & Poor's issued a negative long-term outlook on U.S. debt, saying the potential for a prolonged stalemate over how to deal with budget shortfalls increases the chance of a downgrade of the nation's AAA bond rating in the next two years unless the issues are addressed. Building permits were up 11.2% in March compared to February, and housing starts rose 7.2%, the Commerce Department said. However, both were still down more than 13% from last March. Sales of existing homes were up 3.7% in March, according to the National Association of Realtors®. While not stellar, the figure is an improvement over February's 8.9% decline. Gold hit a new record of $1,500 an ounce just two months after first reaching $1,400, while oil prices showed few signs of retreating. After rising for seven consecutive months, regional manufacturing tracked by the Philadelphia Federal Reserve Bank fell sharply in April. Though the 18.5% figure for the Philly Fed's manufacturing index still represented growth, it was a far cry from March's 43.4% increase. The Conference Board's index of leading economic indicators was up 0.4% in March. The most positive factors were the 10-year Treasury/Fed funds interest rate spread and increased housing permits, while consumer expectations were a drag on the index. Eye on the Week Ahead Some Nasdaq-listed stocks could see volatility in advance of the May 2 rebalancing of the stocks that comprise the Nasdaq 100 index. The announcement coming out of the Federal Open Market Committee meeting--the next-to-last before the scheduled demise of quantitative easing (QE2) at the end of June--will be scrutinized for any clues about possible policy shifts. Finally, the initial estimate for Q1 economic growth will be of interest. Key dates and data releases: new-home sales (4/25); home prices (4/26); durable goods orders, Federal Open Market Committee (FOMC) announcement (4/27); Q1 gross domestic product (GDP) initial estimate, pending home sales (4/28); personal income/spending (4/29). 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. Equities data reflect price change, not total return. 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 steady as investors eye inflation, first-quarter earnings

Global economic news


U.S. cost of living rises for ninth month

The U.S. Consumer Price Index increased 0.5% for a second month. The rise was led by a 3.5% increase in energy costs, a 5.6% surge in gas prices, and a 0.8% gain in food costs. Excluding volatile food and energy prices, the core gauge rose 0.1%, less than forecast. It is the ninth month in a row that the U.S. cost of living has increased. Producer prices also continued their rise last month, gaining a seasonally adjusted 0.7%, as energy costs mounted. Underlying inflation pressures, as measured by the core index, gained a more-than-expected 0.3%. While faster than anticipated, that inflation level is still in line with the U.S. Federal Reserve Board's unofficial inflation target of 2.0%.

China's rapid growth continues

China's economy in the first quarter grew 9.7% from a year earlier, down from a 9.8% rate in the fourth quarter. Inflation accelerated to nearly a three-year high as the CPI rose in March by 5.4% from a year earlier, up from 4.9% in February. That was the fastest rise since July 2008. China's leaders have said that taming inflation is their top priority for the year.

Euro hits 15-month high amid rate hike expectations

The euro hit a 15-month high against the dollar this week amid expectations that the European Central Bank will raise rates to control inflation. This week, the European Union reported a record monthly increase in eurozone inflation that pushed the annualized rate for March to a 29-month high. Investor optimism that officials will succeed in containing the European debt crisis also supported the euro in spite of Ireland's downgrade and lingering worries of a Greek default.
Moody's cuts Irish debt rating

Moody's Investors Services cut Ireland's credit rating by two levels on Friday to the lowest investment grade and left the country's outlook at negative. That downgrade came only one day after Fitch Ratings affirmed its "BBB+" rating and removed the threat of downgrade. Ireland's government, like those in other peripheral eurozone countries, is struggling to lower its budget deficit and restore economic growth.
U.S. Congress passes budget deal, averting shutdown

The U.S. Congress gave its final approval to legislation that will cut government spending by $38.5 billion. The passage of the bill averted a government shutdown that had been slated for the end of day on Thursday.
U.S. data show economy still struggling

Economic data showed economic growth in the United States is still struggling to recover from the recession that ended in June 2009. New U.S. jobless claims rose by 27,000 to a seasonally adjusted 412,000 last week. Claims thus reached their highest level in two months. U.S. retail sales rose a weaker-than-expected 0.4% in March but, excluding gas sales, were up only 0.1%. Even so, on Friday, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose in April from a 16-month low as job gains helped Americans deal with rising fuel costs.
Singapore tightens policy

Singapore tightened monetary policy on Thursday as it reported a strong first quarter for the economy. Singapore's speedy growth should be a bellwether for other emerging economies in the region and comes on the back of strong economic data from China.
Global corporate news

Alcoa kicks off earnings season with profit reports

Aluminum maker Alcoa was the first blue-chip company to report first-quarter earnings this week. The company swung to profit in the first quarter because of improved sales and higher prices in most major markets.
Google's profits fall short of expectations

Google reported an 18% profit increase for the first quarter. Those earnings for the Internet bellwether fell short of forecasts amid a 54% surge in operating costs as the company tried to retain staff and expand beyond its core Internet search business.
Banks post profits

Bank of America's first-quarter profit fell 35%, and revenue dropped across the majority of its business lines. Even so, it was the first time in three quarters that the largest U.S. lender by assets reported a profit. Meanwhile JPMorgan's profit rose 67%, but the bank is still struggling to boost revenue amid sluggish loan growth and mounting mortgage costs.

Zipcar's IPO draws greater-than-expected demand

Zipcar, the Cambridge, Massachusetts-based car sharing company, raised $174.3 million in its initial public offering this week after increasing the shares. Its shares soared as much as 75% on its first day of trading. Zipcar was one of seven companies that launched initial public offerings this week.
The week ahead

Earnings season continues with reports throughout the week from names including Citigroup, Amazon, Intel, IBM, and Johnson & Johnson.

The U.S. census bureau releases reports on building permits and housing starts on Tuesday, April 19.

Markit releases its eurozone Purchasing Managers' Index on Tuesday, April 19.

The Mortgage Bankers' Association reports U.S. mortgage applications, and the National Association of Realtors releases U.S. existing home sales data on Wednesday, April 20.

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--

Week in Review: Markets calm as economic recovery offsets political uncertainties

Global economic news

U.S. budget battle showdown down to wireWith high stakes and credibility on the line, and facing a firm deadline of midnight Friday, Democrats and Republicans in the U.S. Congress kept negotiating the 2011 federal budget overnight Thursday into Friday morning. At issue: proposed spending cuts of $33 billion to $40 billion and political differences on various issues. At stake: shutting down all-but-essential government services, furloughing 800,000 federal employees, and cutting off paychecks to workers. Among many ripple effects: suspending government mortgage loan guarantees to lower-income families, closing national parks and leaving tourist industry workers without pay, and stopping government economic data collection. A 20-day government shutdown in late 1995 reportedly cut economic growth by a full percentage point in that quarter.


U.S. jobless claims shrink furtherThe number of new claims for unemployment benefits fell by 10,000 to 382,000 during the week ended April 2, marking the seventh decrease in 10 weeks. The four-week average fell by 5,750 to 389,500.


U.S. service sector growth easesThe U.S. nonmanufacturing sector grew in March, but at a slower pace than February, according to the Institute for Supply Management. The ISM nonmanufacturing purchasing managers’ index fell to 57.3 from 59.7 in February.


March retail sales strongAmerican consumers spent more freely in March, allowing retailers – from discounters to sellers of luxury brands -– to post strong sales figures. A group of 25 retailers tracked by Thomson Reuters posted a 1.7% rise in same-store sales in March. Costco reported a 13% rise in same-store sales, while Victoria Secret’s parent firm Limited Brands increased sales by 14%. Higher-end retailers Saks and Nordstrom also had robust results. Target, Kohl’s, and JC Penney were among the retail chains with declining same-store sales.


ECB raises interest ratesThe European Central Bank raised its benchmark interest rate on Thursday by 0.25 percentage points, as was widely anticipated. The ECB must walk a fine line, between controlling inflation, already at a 2.6% annual rate last month, and not creating obstacles to economic recovery for troubled eurozone member countries Greece, Ireland, and Portugal.



China raises interest rates for fourth time; inflation still highChina’s central bank raised interest rates for the fourth time in six months in its latest effort to tame inflation and stop the world’s fastest-growing economy from overheating. Consumer prices in China rose 4.9% in February while producer prices were 7.2% higher. Even with tighter controls in place, many economists cited in The New York Times see China’s economy growing 9% in 2011 with a 3% annual inflation rate.


Portuguese government to receive bailout packageThe Portuguese government is seeking financial assistance from the European Union as it strives to regain solid financial footing. A package worth €90 billion ($129 billion) is being worked on involving the European Commission, European Central Bank, and International Monetary Fund. It could take several weeks to work out an austerity program that would accompany the bailout. Portugal is the third nation in the eurozone, after Greece and Ireland, to ask for a bailout.


Portuguese debt downgrade led to rising yieldsPortugal’s debt rating continued to plummet and its government bond yields soared this week after Moody’s Investor Service downgraded Portugal’s long-term bonds by one level, to "Baa1" from "A3." Standard & Poor’s lowered its rating for Portuguese debt by three notches in two cuts in the last couple of weeks. The Portuguese government paid an average yield of 5.117% on six-month Treasury bills at an auction on Wednesday, compared with 2.984% at a March 2 auction. The average yield on 12-month Portuguese Treasury bills rose to 5.902%, from 4.441% on March 16.


Japanese business confidence fallsJapanese business sentiment is sagging after March’s devastating earthquake and tsunami, according to a quarterly survey released Monday by Japan’s central bank. Sentiment went from a reading of plus 3 before the earthquake to minus 2 afterwards. Economists believe overall industrial production slumped by 10% in March compared with February and the economic fallout could continue for months. Meanwhile, a so-called "economy watchers survey" that regularly questions hotel and restaurant workers, barbers, and tax drivers on economic sentiment fell to 27.7 in March from a reading of 48.4 in February.


Toyota, Japanese airlines to resume activityToyota said it would resume limited production from April 18 to 27 at its Japanese plants, where half of all its vehicles sold globally are built. Japan’s major airlines plan to restart flights to the Sendai airport, which had shut downs after the March 11 tsunami.


Eurozone business growth eases slightlyPrivate-sector growth in the eurozone eased a bit in March, according to a survey released this week by financial information firm Markit. Its eurozone composite output index eased to 57.6 from 58.2 in February. Any reading above 50 indicates economic growth.


German manufacturing orders, industrial production riseGerman manufacturing orders were 2.4% higher in February than January, as domestic and eurozone demand improved. This adds to a 3.1% increase in January orders. Meanwhile, German industrial production rose 1.6% in February from January and 14.8% from February 2010, another strong sign of economic recovery in Germany.

Global corporate news

TI chips in $6.5 billion for National SemiconductorTexas Instruments offered $6.5 billion in cash to buy its rival semiconductor chipmaker National Semiconductor. The bid represented a 78% premium over National’s stock price at the time of the bid, indicating how highly TI values National’s niche of making chips based on analog technology that are used in cell-phone radio signals and in the management of power consumption in computers.


Bombardier profits take offCanadian plane, train and snowmobile maker Bombardier rode a big pickup in business-jet orders to much higher fourth-quarter earnings. The Montreal-based firm almost tripled its net aerospace orders in its latest quarter while selling 10 times as many business aircraft as a year earlier, propelling its profits 82% higher than the year-earlier quarter.



Bite taken out of Apple’s size on Nasdaq 100Apple will have a large bite taken out of its weighting on the closely tracked Nasdaq 100 Index as part of a large and rare rebalancing of the index on May 2. After the rebalancing, Apple will make up 12% of the Nasdaq 100 versus 20% today. The rebalancing was partly driven by Apple’s meteoric rise, as the firm’s shares have grown more than fourfold in two years, causing Apple to have too great an impact on one of the most heavily traded stock indices. More than $330 billion of assets track the Nasdaq 100 through ETFs, mutual funds, options, and futures.


KB Home loss grows on weak home salesHome builder KB Home saw its first-quarter loss more than double from a year earlier on falling orders and a substantial decrease in revenue. Deliveries fell 28% and net orders were 32% lower. The year-over-year comparison was unfavorable partly because of the temporary boost provided by last year’s federal tax credit for homebuyers.


Toyota faces possible downgradeMoody’s Investor Service said it has put Toyota Motor and its subsidiaries on review for a possible downgrade as a result of the financial impact caused by the March 11 earthquake and tsunami and the resulting interruption of automobile and auto parts production. Moody’s is also closely watching the quake’s impact on Nissan Motor and Honda Motor.


Dish wins Blockbuster dealIn a dramatic marathon bankruptcy auction, Dish Network made a winning $320-million bid for the assets of Blockbuster, the movie-rental chain. Dish may use some Blockbuster stores to sell subscriptions to its service and is reportedly interested in some synergies from Blockbuster’s on-demand business in a potential effort to challenge Netflix.

The week ahead

• German CPI data released Tuesday, April 12
• JPMorgan Chase earnings due Wednesday, April 13
• Google earnings due Thursday, April 14
• Chinese GDP released Friday, April 15
• US CPI data released Friday, April 15
• Michigan consumer sentiment survey released Friday, April 15

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--

Estate Tax Changes under the 2010 Tax Relief Act

Estate Tax Changes under the 2010 Tax Relief Act

Market Week: April 4, 2011

The Markets An improving employment picture helped propel domestic equities higher once again despite yet another surge in oil prices. The Standard & Poor's 500 ended the week just shy of its recent high of 1343 in February, while the small-cap Russell 2000 is now at its highest level since July 2007. Meanwhile, the Nasdaq continued to lag the other indexes for the year.

Market/Index	2010 Close	Prior Week	As of 4/1	Week Change	YTD Change
DJIA	11577.51	12220.59	12376.72	1.28%	6.90%
Nasdaq	2652.87	2743.06	2789.60	1.70%	5.15%
S&P 500	1257.64	1313.80	1332.41	1.42%	5.95%
Russell 2000	783.65	823.85	846.77	2.78%	8.05%
Global Dow	2087.44	2166.09	2197.24	1.44%	5.26%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.30%	3.46%	3.46%	0 bps	16 bps

Last Week's Headlines

• Unemployment fell slightly in March, to 8.8%. It's the fourth straight decline from November's 9.8% and the lowest rate in two years. Nonfarm payrolls added 216,000 jobs during the month, mostly in business and professional services, health care, leisure/hospitality, and mining.
• Consumer spending was up once again in February, the Commerce Department said, rising more than twice as much as disposable personal incomes. Spending increased by 0.7% compared to January, while incomes rose 0.3%. The savings rate also fell slightly, from 6.1% of income to 5.8%.
• Construction spending fell 1.4% in February to the lowest level since October 1999, and was down 6.8% from the previous February.
• Manufacturing expansion continued in March, though at a slightly slower rate than the previous month. The Institute for Supply Management said 15 industries reported expansion, while only 2--wood products and primary metals--contracted.
• Home prices fell once again in January, when the S&P/Case-Shiller index of 20 leading metropolitan areas showed an average 1% decline from December. They are now down 3.1% from the previous January.
• Portuguese and Greek sovereign debt got additional downgrades from Standard & Poor's, putting Portugal's rating just above junk status. And Ireland agreed to provide an additional €24 billion in financial support to four major Irish banks so bondholders would not suffer losses.

Eye on the Week Ahead

Scheduled announcements by several foreign central banks, including those of Japan, Great Britain, and the European Union, will be watched for potential interest rate hikes. And unless an agreement can be reached in advance of yet another deadline for a potential government shutdown at week's end, Washington budget battles could be of interest.

Key dates and data releases: U.S. services sector, Federal Open Market Committee minutes (4/5); wholesale trade/inventories (4/8).


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. Equities data reflect price change, not total return.


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: U.S. markets have strong first quarter amid global uncertainty

Global economic news

U.S. economy creates 216,000 jobs; unemployment rate dips to 8.8%In a sign that the U.S. labor market may be strengthening, the nation’s companies added 216,000 jobs in March, more than the 190,000 gain projected by a number of leading economists. The U.S. Department of Labor reported that the jobless rate fell again in March to a two-year low of 8.8%. The government’s jobs creation figure is even higher than the 201,000 jobs ADP Employer Services estimated were added to U.S. payrolls last month.

Home prices in U.S. drop again in JanuaryThe average price of single-family homes in 20 major U.S. metropolitan areas fell 3.1% from a year ago, according to the Standard & Poor’s/Case-Shiller Home Price Index. January is the sixth month in a row that U.S. home prices have fallen. Eighteen of the twenty markets covered by the survey recorded year-over-year price declines.

Consumer spending in U.S. rises in FebruaryU.S. consumer spending jumped 0.7% in February, the eighth-straight month of increases. In addition, the U.S. Department of Commerce said that personal incomes rose 0.3% for the month. Still, higher consumer prices absorbed a significant portion of the spending increase. After inflation, the increase was a more modest 0.3%.

U.S. Treasury recoups TARP fundsThe U.S. Department of the Treasury reported that money it loaned to banks during the financial crisis has been paid back. The federal bailout and its Troubled Asset Relief Program (TARP) is currently $6 billion in the black. Still, according to published reports, Treasury Secretary Timothy Geithner admitted that the federal government has “more work to do repairing the damage caused by the crisis and strengthening the recovery, but today is an important milestone in our efforts to recover taxpayer dollars as we continue winding down TARP.”

Confidence of U.S. consumers falls from three-year highThe Conference Board’s Consumer Confidence Index fell more than anticipated to 63.4 in March from a revised 72.0 in February. The sharp decline in confidence was driven by a number of global and economic factors, including rising gas and oil prices, the Japan crisis, and ongoing unrest in the Middle East.

America’s CEOs report encouraging outlook for sales, jobsThe Business Roundtable, an association of CEOs at the largest U.S. companies, reported in its first-quarter survey that nearly all its members expect sales to increase over the next six months. More than 60% expect additional investment in their businesses, and over half plan to hire more workers in the next two quarters.

U.S. businesses expand at a faster-than-expected paceThe Institute for Supply Management said its business barometer slipped to 70.6 in March from a reading of 71.2 in February. The index surpassed the 69.6 median projected by economists surveyed by Bloomberg News. An index reading greater than 50 indicates business expansion.

S&P downgrades Greece, PortugalRatings agency Standard & Poor’s lowered its rating of Greek sovereign debt two notches to “BB-” from “BB+,” dropping the country’s debt further into junk territory. S&P also cut Portugal’s senior debt rating by one notch to “BBB-” from “BBB.” The most recent cut follows last week’s two-notch downgrade of Portugal, which is now close to losing its investment-grade status for the first time. The outlook for both countries’ ratings remains negative, according to S&P. Greece has already accepted a three-year plan of emergency help from the European Union and International Monetary Fund. Standard & Poor’s expects Portugal to ask the IMF and the European Financial Stability Facility for a similar bailout package.

Irish banks need additional €24 billionA plan to nationalize Ireland’s banking sector may be imminent after a third round of stress tests revealed that the country’s banks will need an additional capital influx of €24 billion. The stress tests are a condition of the bailout the Irish government agreed to with the European Union and International Monetary Fund in November. With the latest bailout, the total cost of the bank rescue is approximately €70 billion. Ireland’s government also announced plans for an overhaul of the country’s banking system aimed at restoring investor confidence.

Eurozone confidence slips in MarchAn index of executive and consumer sentiment in the 17-nation euro region fell slightly to 107.3 in March from a revised 107.9 in February, the European Commission said. The drop in the confidence measure was larger than economists had forecast, as rising oil prices, Middle East unrest, and Japan’s earthquake resulted in rising pessimism for global growth prospects. February’s reading was the highest for the index since August 2007.

German unemployment falls to lowest level since 1992The number of Germans who were out of work dropped a seasonally adjusted 55,000 to 3.01 million, according to the Nuremberg-based Federal Labor Agency. That is the lowest level since June 1992. Germany’s unemployment rate fell to 7.1% in March from 7.3% the month before.

Global corporate news

Fujitsu says impact of Japan’s earthquake to be in “billions of yen”Following the country’s March 11 earthquake and tsunami, Japanese electronics conglomerate Fujitsu will have to revise its earnings forecasts for the fiscal year ending this month. Fujitsu’s president said the quake’s impact on earnings “will likely exceed several billions of yen.” Fujitsu, which has resumed most of its operations in the quake-hit region, is among several major Japanese companies affected by one of the largest natural disasters in the country’s history.

Harry & David to file for bankruptcy protectionHarry & David announced it is preparing to file for Chapter 11 bankruptcy protection. In a “prearranged” deal with creditors, the specialty gourmet fruit retailer will convert its bond debt to equity and seek to raise additional capital through a new stock sale. The company has been struggling as consumers cut back in the weak economy. In January, the 75-year-old retailer reported that revenue during the critical holiday quarter fell nearly 2%, and last month the company cut approximately 100 jobs.

EBay to buy GSI Commerce for $2.4 billionEBay agreed to purchase e-commerce company GSI Commerce for $2.4 billion, extending eBay’s reach into Internet retailing and intensifying the company’s rivalry with Amazon. GSI’s core business is providing e-commerce infrastructure — e-store technology, payment processing, fulfillment, marketing, and customer service — for more than 180 top brands and retailers.

GE to purchase stake in ConverteamGeneral Electric agreed to pay $3.2 billion in cash for a controlling stake inConverteam, the power conversion company. The acquisition of the French company, which serves a variety of industries including oil and gas companies, is the latest in a string of deals totaling $11 billion over the past six months aimed at expanding GE’s energy business. They have also acquired Dresser Inc., Wellstream Holdings, Lineage Power Holdings, and John Wood Group’s well support division.

Qihoo goes publicChinese Internet company Qihoo 360 went public this week on the New York Stock Exchange, and the company’s shares immediately doubled at the start of trading. The Internet software company, which sells antivirus software and security services, raised more than $175 million in its IPO. Qihoo also makes the second-most-used Internet browser in China, behind Microsoft’s Internet Explorer.

Galaxy reports profit dropGalaxy Entertainment Group said its net profit fell 22% last year in part because of one-time accounting and valuation adjustments. The casino operator, controlled by the family of tycoon Lui Che Woo, reported that net profit totaled HK$898.46 million last year, down from HK$1.15 billion in 2009. Galaxy is moving ahead with plans to open a HK$14.9 billion casino-resort in Macau’s lucrative Cotai area.

The week ahead

• Institute for Supply Management’s Services Index data released Tuesday, April 5
• China’s Consumer Price Index released Wednesday, April 6
• U.S. initial jobless claims data released Thursday, April 7
• U.S. consumer credit data released Thursday, April 7
• Bank of England announcement due Thursday, April 7
• Canada’s Labour Force Survey results due Friday, April 8

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 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 of 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; Forbes.com; CNNMoney.com; msnbc.com.

--see disclaimer below--