Week in Review: Stocks rally as Greece's austerity plans opens way for EU bailout

Global economic news

Greece approves austerity measuresOn Thursday Greek Prime Minister George Papandreou won a second vote from lawmakers to implement his €78 billion package of budget cuts, asset sales, and tax hikes. The package qualifies the country to receive the next tranche of aid from the European Union. Deutsche Bank and Allianz, Germany's largest bank and insurer, were among the country's firms that agreed to reinvest in Greek debt to help avoid the euro area's first default. They agreed to roll over at least €2 billion of Greek bonds maturing in 2014. German and French lenders are the largest foreign holders of Greek debt, and their participation may help the European Union meet a goal of getting banks to roll over at least €30 billion worth of bonds.


IMF says global markets will suffer if the United States fails to raise debt ceilingThe International Monetary Fund said global markets will suffer if the U.S. Congress does not approve an increase in the $14.3 trillion debt ceiling. It also cautioned about the risk of a sudden increase in interest rates or a sovereign downgrade if lawmakers fail to reach a budget and debt compromise. U.S. Democrats and Republicans have been negotiating to find a way to cut the long-term deficit and raise the nation's $14.3 trillion debt ceiling. In April, Standard & Poor's put the U.S. government on notice that it risks losing its top credit rating if policymakers do not agree on a plan by 2013 to reduce budget deficits and the national debt. Moody's Investors Service in June said that it would put the U.S. government's "Aaa" rating under review for a downgrade unless there is progress on increasing the limit by mid-July. August 2 is the "hard deadline" on which the United States will no longer be able to meet all of its debt obligations, according to President Barack Obama.


Euro gets boost from expectations of ECB rate hikeThe euro hit its highest level in nearly three weeks on bets that the European Central Bank will raise interest rates next week to curb inflation. ECB President Jean-Claude Trichet signaled that officials are determined to raise borrowing costs next week with risks to price stability on the upside. "We are in a state of strong vigilance, and we stand ready to act in a firm and timely manner to avoid that recent price developments give rise to broad-based inflationary pressures over the medium term," Trichet said this week.


Manufacturing slows globally, rises unexpectedly in United StatesManufacturing slowed globally as weakening U.S. growth and Europe's debt crisis damped demand for goods. China's factory index fell to the lowest level since 2009, and in the 17-nation euro area, the gauge dropped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months. Manufacturing increased at the slowest pace in nine months in India, and contracted in Italy, Ireland, Spain, and Greece. On Friday, however, the Institute for Supply Management reported that U.S. manufacturing growth unexpectedly picked up in June.


Italy passes budget cuts in hopes of avoiding debt contagionThe Italian cabinet passed Prime Minister Silvio Berlusconi's proposal of €47 billion in deficit- cutting measures intended to balance the budget by 2014. The cuts are an effort to shield Italy from the debt-crisis contagion. Italy still faces a possible downgrade according to an e-mail from Standard & Poor's on Friday.


Japan's Tankan survey shows corporate sentiment fell sharply after earthquake and tsunamiThe Bank of Japan's quarterly Tankan survey showed that Japanese corporate sentiment fell sharply in the aftermath of the March 11 earthquake; the closely watched index for large manufacturers dropped for the first time in over a year. However, large Japanese companies said they will boost capital spending 4.2% in fiscal 2011. A separate report showed Japan's industrial production rose at the fastest pace in more than 50 years led by carmakers as they restored plant operations after the tsunami and earthquake.


IMF names Lagarde to managing director postThe International Monetary Fund named French Finance Minister Christine Lagarde as its next managing director. Lagarde is the first woman and the eleventh consecutive European to lead the institution considered to be the world's emergency lender. She takes the reins after the resignation of Dominique Strauss-Kahn, who was released from house arrest on Friday as the sexual assault case against him began to unravel.


U.S. home prices slow pace of declineU.S. home prices slowed their pace of decline in April. Prices rose 0.7% in April compared with March according to the Standard & Poor's Case-Shiller 20-city home price indices. Foreclosures and bruised consumer confidence continue to weigh on the housing market however.


Corn prices dropCorn fell more than 10% in two days this week after the U.S. Department of Agriculture said U.S. farmers planted a bigger crop than analysts were expecting.

U.S. and global corporate news

Toyota and Honda sales fall in JapanToyota Motor and Honda Motor led a 23% drop in domestic vehicle sales, a tenth straight monthly decline, after the nation's earthquake disrupted production. Toyota's deliveries dropped 28% from a year earlier. Sales at Honda dropped 32%.


BJ's Wholesale soldBJ's Wholesale Club agreed to be bought by Leonard Green & Partners and CVC Capital Partners for about $2.8 billion. The transaction, which is subject to shareholder approval, is expected to close in the fourth quarter.


BYD jumps 41% in trading debutBYD, the Chinese automaker partially owned by investor Warren Buffett's Berkshire Hathaway, jumped 41% in its trading debut in Shenzen.


NewsCorp sells MyspaceThe Wall Street Journal reported that NewsCorp sold music and entertainment Web site Myspace to Specific Media, a little-known ad-targeting firm, for $35 million in cash and stock. The one-time popular Internet site was acquired six years ago for $580 million.

The week ahead

• European Union finance ministers holds a conference call on Saturday, July 2, to free up a fifth installment of aid to Greece from last year's bailout.
• Eurostat releases its producer price index for the eurozone on Monday, July 4.
• The U.S. Census Bureau reports on new orders from U.S. manufacturers on Tuesday, July 5.
• ECB policymakers meet Thursday, July 7, to vote on whether to raise the eurozone's main refinancing rate.
• Japan reports its trade balance on Thursday, July 7.

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 volatile as Greece seeks aid, data show sluggish recovery

Global economic news

EU leaders promise aid to GreeceEuropean Union leaders promised to help Greece avoid a debt default as long as Greek Prime Minister George Papandreou pushes through a package of budget cuts next week. Leaders pledged to do whatever it takes to stabilize the eurozone economy. Greece has been in talks with European and international officials over €5.5 billion ($7.9 billion) in austerity measures as a necessary step to receiving its next quarterly disbursement on its existing loan as well as securing a second aid package. Greece will now have to get €78 billion of austerity measures through parliament.

U.S. Federal Reserve Board lowers growth forecastThe U.S. Federal Reserve Board lowered its forecasts for economic growth and employment in 2011 and 2012. The Fed now projects economic growth of 2.7% to 2.9% in 2011, down from 3.1% to 3.3%. It currently predicts an unemployment rate of 8.6% to 8.9% in the final quarter of this year, compared with a rate of 8.4% to 8.7% projected in April. However, the Fed noted that several factors holding back growth are temporary, including the impact of higher energy prices and disruptions to manufacturing caused by Japan’s earthquake.


Japan posts near-record trade deficitJapan recorded its second-largest trade deficit ever in May, as the nation continued to feel the aftereffects of its March earthquake and tsunami and subsequent disruption to exports. Higher fuel costs caused the price of imports to rise. Despite Japan’s recent struggles, many analysts expect the economy to resume growth in the July-to-September quarter, because industrial output has started to show signs of improvement.


Italian banks trading haltedTrading in Italian banks was suspended Friday after a sharp drop in stock prices. It is rumored that several Italian banks could fail a Europe-wide stress test in July. Moody’s Investors Service also warned that some Italian banks face possible debt rating downgrades.


U.S. durable goods reboundA 1.9% rebound in orders for long-lasting manufactured goods in May, reported by the U.S. Department of Commerce, gave hope that recent economic weakness would turn out to be temporary. Durable goods orders had fallen 2.7% in April after the March 11 earthquake and tsunami in Japan had caused disruptions in the supply of automobile and electronics components.



U.S. first-quarter gross domestic product revised up to 1.9%The U.S. economy grew slightly faster in the first quarter of 2011 than had been previously estimated. The Commerce Department revised its GDP growth figure to an inflation-adjusted annualized rate of 1.9% from its previous estimate of 1.8%.


U.S. home sales fall furtherThe National Association of Realtors reported that both existing and new home sales slowed in May. Sales of previously occupied homes in the United States fell 3.8% from April to their lowest level in six months. Purchases of new U.S. houses fell 2.1% from April, according to the Commerce Department. However, preliminary figures showed a jump in contract signings, a trend that points to a possible pickup in future sales.


U.S. jobless claims upInitial claims for unemployment benefits by U.S. workers rose by 9,000 to a seasonally adjusted 429,000 in the week ended June 18. The four-week moving average of new claims remained unchanged from the previous week’s revised figure of 426,250.


U.S. consumer confidence dropsU.S. consumer confidence fell in the period ended June 19 for the first time in five weeks, according to the Bloomberg Consumer Comfort Index, which dropped to -44.9 from -44.0 a week earlier. A high unemployment rate, higher food costs, and lower home values all contributed.


Eurozone consumer confidence slipsConsumers in the 17 countries that use the euro were slightly less confident in June, according to an early estimate from the European Commission’s monthly survey. The measure of confidence slipped to -10.0 from -9.9 in May. Both readings were better than April’s -11.9.


Eurozone economies contract overallGermany and France were the only eurozone nations in which private-sector activity grew in June. Most of the remaining 15 nations had economic contractions for the first time since November 2009. Output by both manufacturing and services firms slowed, sending the Markit eurozone Purchasing Managers’ Composite Index down to 53.6 in June from 55.8 in May.


German business confidence rises; economic expectations fallGerman business confidence improved in June, its first move upward since February, according to German research institute Ifo. Business confidence reached 114.5, up from 114.2 in May. Another report showed economic expectations fell much more than expected in June. The Center for European Economic Research, ZEW’s widely watched index fell to -9.0 in June from a revised 3.1 in May. A decline to -4.1 had been forecast.

Global corporate news

FedEx posts sharply better profit, issues positive forecastFedEx reported a 33% growth in its quarterly profit and forecast annual 2012 earnings above Wall Street expectations. Because of the world’s largest air-cargo carrier’s extensive reach, it is seen as a bellwether of global trade. While acknowledging the short-term impact of higher oil prices, poor weather, and Japan’s earthquake, FedEx forecasts a 3% rise in U.S. gross domestic product in 2012, after 2.5% growth in 2011, and a 4.3% rise in U.S. industrial production in 2012 after a 4.2% increase in 2011.


Oracle posts strong profits, but softness in hardwareTechnology giant Oracle posted a 36% rise in profits and a 13% growth in revenue for its fiscal fourth quarter. However, declining hardware product sales — a new area for Oracle as a result of its Sun Microsystems acquisition last year — gave investors cause for concern. Meanwhile, Oracle’s traditional software business thrived, with new sales up 19%.


Lennar earnings down 65%Homebuilder Lennar reported a 65% decrease in its second-quarter profit, exceeding very low expectations, as oversupply and foreclosures weighed on home prices and sales. Lennar’s overall revenue fell by 6.1%, and its revenue from home sales was off by 6.5%.


Kroger profit higherSupermarket chain Kroger posted a 16% increase in its fiscal first-quarter earnings, surpassing estimates, as the company benefited from cost controls and sales growth. Kroger increased sales 11% on low prices and a strategy of building customer loyalty.


Supreme Court sides with Wal-Mart on lawsuitThe Supreme Court threw out an enormous employment-discrimination lawsuit against Wal-Mart Stores, ruling that 1.6 million female alleged victims had too little in common to form a single class of plaintiffs. The decision on the largest class-action lawsuit in U.S. history is expected to affect other employment class-action suits.

The week ahead

• On Monday, June 27, the U.S. Department of Labor releases the core Personal Consumption Expenditures prices data for May.
• On Monday, June 27, Nike releases its quarterly earnings report.
• On Tuesday, June 28, the Conference Board releases the June Consumer Confidence report.
• On Wednesday, June 29, General Mills and Monsanto release their quarterly earnings reports.
• On Thursday, June 30, the U.S. Labor Department releases weekly data on initial jobless claims.
• On Friday, July 1, the European Union, the United Kingdom, and Germany release data on their PMI Manufacturing Indexes.

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 ended June 10, 2011: Stocks fall as investors question strength of economic recovery

Global economic news

U.S. trade deficit narrows; China's surplus less than expectedThe U.S. trade deficit unexpectedly narrowed amid record exports and a plunge in auto and oil imports. The gap shrank 6.7% to $43.7 billion, the lowest since December. Purchases of goods from Japan dropped by a record $3 billion in the aftermath of the earthquake and tsunami. Stocks rallied after the news, on hopes that trade would help boost economic growth. Meanwhile, China reported a less-than-expected $13.1 billion trade surplus in May as surging imports signaled that the nation's demand may support global growth while adding pressure for higher interest rates.

ECB signals rate increase; BOE keeps rates on holdThe European Central Bank signaled it is likely to raise interest rates in July. ECB President Jean-Claude Trichet said "strong vigilance" is needed to contain inflation. The bank raised rates in April for the first time in nearly three years and was the fifth major central bank in the developed world to begin raising rates from the lowest levels of the financial crisis. The Bank of England meanwhile kept its main rate at 0.5% for the twenty-seventh month in a row. Eurozone inflation was running at 2.7% in May, well above the ECB's target of just under 2%.

Bank of Korea raises rates; Indonesia rates unchangedThe Bank of Korea raised interest rates for a third time this year to rein in inflation, which has exceeded its target range, and to curb record household debt. The bank increased the benchmark seven-day repurchase rate to 3.25% from 3%. Korea's rate increase followed one by Thailand on June 1, as job growth and costlier energy caused consumer price gains to exceed the Bank of Korea's 4% ceiling. That was Thailand's fourth rate increase this year. Also this week, the Bank of Indonesia left its reference rate at 6.75%, as a strengthening currency helped contain inflation.

ECB opposes Greek bailoutThe European Central Bank this week maintained its resistance to participating in a bailout of Greece. The Greek budget shortfall may amount to $130 billion through 2014. Governments have been trying to come up with a new aid package by a European summit on June 23 to June 24. The International Monetary Fund has threatened to withhold its share of Greece's bailout until governments that guarantee the financing needs for the next 12 months are covered. The IMF was due to turn over €3.3 billion this month.

Japan's GDP contracts 3.5%Japan's economy contracted 3.5% in the three months ended March 31, less than the 3.7% contraction reported last month. The better-than-expected number is seen as a sign that the economic slump caused by the earthquake was not as deep as expected. An upward revision in inventories helped limit the depth of the downturn. Producer prices in the country rose for an eighth month in May, in line with the rise in energy and raw material costs. Prices companies pay for energy and unfinished goods rose 2.2% from a year earlier. On a more upbeat note, an index of the current business conditions, released by Japan's Cabinet Office, rose to 36 in May from 28.3 in April. However, readings under 50 indicate more pessimism than optimism.

Eurozone economy grows 0.8%The eurozone economy grew 0.8% in the first quarter, up from 0.3% in the previous three months, according to the European Union's statistics office Eurostat. In year-on-year terms, GDP growth was 2.5%, up from 1.9% in the last three months of 2010. Investment, as well as household and government consumption, drove growth in the first quarter. On the flip side, European industrial orders declined more than expected in March, led by a drop in demand for durable consumer goods. Orders fell 1.8% from February. The drop suggests that the eurozone recovery may struggle to gather strength after having expanded at a solid pace in the first quarter.

U.S. jobless claims riseInitial jobless claims unexpectedly increased last week, rising 1,000 to 427,000 in the week ended June 4. The numbers indicate that the labor market is still struggling.

Global corporate news

Toyota forecasts 31% profit drop

Toyota Motor forecast a 31% drop in annual profit after Japan's earthquake disrupted production and sales while the yen strengthened. The company said net income may fall to ¥280 billion in the 12 months ending March 31, 2012, from the¥408 billion that was expected by analysts.

J. Crew posts Q1 lossJ. Crew posted a loss for its fiscal first quarter because of costs related to its March buyout — the company was taken private in early March in a $3 billion acquisition by a group of investors. In addition, the apparel retailer's bottom line was hurt by markdowns and promotions.

The week ahead

• On Tuesday, June 14, the U.S. Department of Commerce releases retail sales for May and business inventories for April. The U.S. Department of Labor reports its Producer Price Index.
• Also on Tuesday, the Bank of Japan completes its two-day policy meeting.
• On Wednesday, June 15, the Labor Department releases its Consumer Price Index for May and the U.S. Federal Reserve Board releases its reports on industrial production.
• On Thursday, the Labor Department releases weekly jobless claims, and the Commerce Department reports data on housing starts for May.
• On Friday, the Thomson Reuters/University of Michigan index of consumer sentiment is released.

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.

Week ending June 3, 2011, in Review: Signs of economic slowdown weigh on markets

This past week was a sobering week of economic news as reports repeatedly signaled a slowing global economy. In the United States, the unemployment rate rose, job creation slowed, home prices dipped, and consumer confidence fell, all trends that reflect a struggle to maintain economic growth. On the brighter side globally, German jobless numbers shrank to a record low, prospects for a Greek bailout improved, and Canada’s economy grew at a healthy rate in the first quarter. However, numerous other indicators pointed downward, including a slowdown in manufacturing activity and in private sector growth within the eurozone.


Stocks were volatile throughout the week as investors reacted to the economic news, and tumbled after the disappointing Friday morning jobs report. Investors embraced the safety of U.S. Treasuries and that caused the yield on 10-year Treasury notes to dip below 3%. As recently as early April, the 10-year U.S. Treasury note yielded 3.60%.

Global economic news

U.S. jobs growth slows, unemployment up in MayFar fewer U.S. jobs were created last month than had been expected. Only 54,000 jobs were added to the U.S. economy for the month, according to the U.S. Department of Labor’s monthly jobs report. The consensus expectation among economists was for 160,000 new jobs to have been created. The unemployment rate rose to 9.1% from 9.0%. A slight decrease, to 8.9%, had been forecast. The report also revealed that in May 45% of unemployed Americans had been out of work for more than six months.


The numbers were disappointing, even after a preview had been provided by the private-sector jobs report released Wednesday by payroll services giant ADP, which found a growth of only 36,000 jobs in May in its survey, far fewer than had been expected. Weekly jobless claims also fell by 6,000 to a seasonally adjusted 422,000 during the week ended May 28. The four-week moving average of new claims dropped by 14,000 to 425,500. Despite the improvements, the numbers concern economists, because the weekly claims figure remains above 400,000, which is seen as a threshold indicator of the health of the job market.


Prospects improve for Greek bailout
Optimism rose this week that a new package of financial aid would be available for Greece, as Germany considered dropping a push to have Greek bonds rescheduled. For weeks, Germany had argued that private investors in Greek bonds should bear part of the burden of any new bailout package. Senior eurozone officials reportedly agreed in principle to a new three-year aid program for Greece. The agreement comes after Moody's downgraded Greek debt another three notches to "Caa1" from "B1" and warned that extended fiscal austerity would likely deepen and prolong recession. Moody's also cut the ratings of eight Greek banks on Friday.


Eurozone manufacturing growth wanesThe Markit Eurozone Manufacturing Purchasing Managers’ Index fell to 54.6, a seven-month low, from 58 in April. This was the index’s sharpest drop since November 2008. Additionally, the final May reading for the Markit Eurozone Composite Output Index, which measures private-sector business activity, fell to 55.8 in May from 57.8 in April.


U.S. home prices slide againU.S. home prices fell 4.2% in the first quarter, reaching their lowest levels since 2002, according to the Standard & Poor's/Case-Shiller Home Price Indices. Homebuyers were apparently affected by uncertain job prospects amid persistently high unemployment. A high level of foreclosures continues to weigh on home sales and prices.


Consumer confidence falls in the United StatesU.S. consumer confidence fell to a reading of 60.8, from 66.0 in April, according to the Conference Board consumer confidence index, amid pessimism about job prospects. The Chicago Institute for Supply Management recorded a sharp drop in its business barometer, to 56.6 in May from 67.6 in April. The May reading was the index’s lowest since November 2009.


Moody’s warns of possible U.S. debt downgradeIn a signal to the U.S. government, Moody’s Investors Service warned that it might lower the U.S. government’s credit rating if Congress fails to increase the nation’s debt limit in the coming weeks. The warning serves as a reminder of what is at stake if a budget stalemate persists. One consequence would be higher interest rates at a time when the U.S. economic recovery is showing renewed vulnerability.


Moody’s may downgrade Japan’s debt ratingMoody’s warned that it might lower its sovereign debt rating for Japan, as that country continues to struggle with deflation, flat economic growth, and high government debt. The tsunami and earthquake on March 11 added to existing problems, likely tipping Japan into a double-dip recession.


German jobless hits record lowGermany’s jobless rate reached a new low in May, with a 7% unemployment rate, down slightly from 7.1% in April, and the lowest unemployment rate since records were first kept in 1999.


Canadian economy rolls forwardCanada’s economy grew at a 3.9% annualized pace in the first quarter of 2011, more than twice the rate of that of growth in the United States, Canada’s largest trading partner. The Canadian economy benefited from businesses replenishing inventories and investing more to remain competitive. However, both consumer and government spending were weak.

Global corporate news

Japanese, U.S. auto sales reflect parts shortagesAuto sales declined in both the United States and Japan in May, hurt in part by the widespread shortage of parts after the severe disruptions caused by the March 11 earthquake and tsunami. In Japan, May auto sales fell by 38% from a year earlier. However, the decline in vehicle sales varied sharply from one carmaker to the next. Toyota Motor’s vehicle sales dropped 57%, Honda Motor fell 35%, and Nissan Motor’s sales slipped just 16%.


In the United States, vehicle sales slipped slightly. However, while Ford Motor and General Motors’ sales were fairly flat, Chrysler Group had a 10% rise in sales, and Hyundai Motor’s sales soared more than 20% as its fuel-efficient, relatively low-priced vehicles rose in popularity, and the Korean automaker benefited from shortages at Japanese firms Toyota and Honda.


American retailers post mixed resultsRetailers registered mixed results in May. Costco reported a 13% increase in May for stores open for more than a year, aided by gasoline sales and favorable foreign exchange rates. Macy’s also reported robust numbers, with strong results across the board, including upscale Bloomingdales stores and its online operations. Upscale retailers Saks and Nordstrom both reported a healthy increase in sales. Among retailers with disappointing results were Target, Victoria’s Secret, and JCPenney.


Groupon to file IPOSocial buying web site Groupon filed to go public with an IPO that could value the company at as much as $20 billion. On Thursday, the two-and-a-half-year-old e-commerce company, filed to go public, looking for raise up to $750 million. Groupon has grown rapidly but has incurred huge losses, and faces impending competition from Internet giants Google and Facebook. The IPO comes on the back of LinkedIn's successful IPO in late May.


Nokia issues profit warningNokia, the world’s largest mobile phone maker, warned that its core business might not earn a profit this quarter, as the Finnish company faces rigorous competition from rivals Apple and Google, whose phones — particularly smartphones — and operating platforms are surging in popularity.


Apple adds clarity by offering glimpse at iCloudApple said it would announce next week a new Internet service called iCloud that would allow people to gain access to music, photos, and videos on multiple devices, including computers and cell phones, without needing to sync those devices. Apple has signed contracts with major music labels to license their recordings. The pre-announcement was unusual for Apple, which usually remains tightlipped about new products until they are officially unveiled.

The week ahead

• GDP data for Japan and the European Union to be released Wednesday, June 8.
• U.S. jobless claims to be reported Thursday, June 9.
• Bloomberg Consumer Comfort Index to be released Thursday, June 9.
• German CPI to be reported on Friday, June 10.
• U.S. import and export prices to be reported Friday, June 10.

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--

Stocks end last week flat as investors eye lackluster data and earnings disappointments

Global economic news

Mixed U.S. economic data worry investorsIn the United States a government report showed a larger-than-expected drop in jobless claims. The report bolstered optimism about the economy. However, other reports were less favorable. Manufacturing growth in the Philadelphia region unexpectedly declined in May to the slowest pace in seven months. New home construction fell 10.6% in April from March. Construction of homes and apartments dropped 10.6% in April to a seasonally adjusted annual rate of 523,000 compared with a month earlier, according to the U.S. Department of Commerce. From the same month a year ago, home starts are down 23.9%.

BOJ maintains monetary policyThe Bank of Japan voted to maintain its monetary policy — a ¥30 trillion credit program and a ¥10 trillion asset purchase fund and to keep its key overnight rate at zero to 0.1%. The BOJ kept the policy intact despite reports earlier in the week that showed Japan's economy contracted at a much-worse-than-expected 3.7% annualized rate in the January-March period. That decline tipped the country into a recession as the March 11 earthquake and tsunami caused declines in consumer spending, business investment, and private sector inventories.

BOE leaves rates unchangedThe Bank of England left interest rates unchanged this month with the majority of policymakers warning that tightening policy now could damp consumer spending and hurt the recovery. In the May 5 minutes of the bank's monetary policy committee meeting released Wednesday, members said an increase could adversely affect consumer confidence, which has been adversely affected by government spending cuts and accelerating inflation. Underlining the fragile nature of the recovery, U.K. unemployment claims have risen at the fastest pace since January 2010. Unemployment fell 36,000 to 2.46 million people in the quarter through March.

Global corporate news

Moody's downgrades debt of Australia's largest banksMoody's Investors Services downgraded the debt ratings of Australia's largest lenders to "Aa2" from their previous rating of "Aa1," one notch below Moody's top rating. The downgrade comes as ratings firms worldwide step up reviews of the global banking system following the 2008 subprime mortgage crisis and subsequent backlash against the ratings industry.

LinkedIn's stocks soars after IPOLinkedIn's stock soared to a high of $122.70 on its first day of trading. The professional networking company's IPO priced at $45 per share a day earlier.

Gap slashes year outlookThe Gap slashed its full-year earnings outlook and reported that its net income fell 23% to $233 million for the quarter ended April 30. The company attributed its results to faster-than-expected cost increases; the Gap said it is spending about 20% more than a year ago on each item it plans to sell.

TEPCO reports ¥1.27 trillion lossTokyo Electric Power (TEPCO) sustained a net loss of ¥1.27 trillion for the fiscal year ended in March after incurring massive costs to battle the Fukushima Daiichi nuclear accident. The company warned of a significant deterioration of its financial position and raised doubts about its ability to continue as a "going concern."

Liberty Media in bid to buy Barnes & NobleLiberty Media proposed to buy Barnes & Noble for $1 billion. Barnes & Noble, the largest bookstore chain, put itself up for sale last summer but has struggled to find a buyer amid a deteriorating outlook for booksellers.

The week ahead:

• The U.S. Census Bureau reports April new home sales on Tuesday, May 24.
• The Commerce Department reports U.S. personal income and spending on Friday, May 27.
• The University of Michigan and Thomson Reuters releases its University of Michigan Consumer Sentiment Index on Friday, May 27.
• The eurozone reports purchasing managers' indices for manufacturing and services on Monday, May 23.

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: 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--