Week in Review: Stocks higher as debt deals and positive earnings cheer investors

U.S. and global economic news

European leaders agreed to aid package for GreeceEuropean leaders on Thursday agreed on a plan to reduce Greece's debt burden in an effort to prevent contagion to other weak economies in the eurozone. The overall size of the bailout package to cover Greece's financial gap is €109 billion and will include the participation of the International Monetary Fund and the private sector. The plan also cuts interest rates on bailout loans to Greece and doubles the repayment period to 15 years. Officials said the interest rates on Ireland's and Portugal's bailout loans will be cut to the same low level. European leaders also agreed on new steps to prevent the spread of Greece's debt problems. In the wake of the debt deal, Fitch Ratings said the role of the private sector in the Greek bailout plan would constitute a "restrictive default." In other words, the proposed debt exchange implies a 20% net present value loss for banks and Greek government debt holders. 



U.S. lawmakers continue debate over deficit reduction dealIn the United States, Congress and the White House continued negotiations to cement a deal to increase the government's borrowing authority while cutting spending and overhauling the tax code. The White House has said if the government's $14.29 trillion debt ceiling is not raised by August 2, the United States will run out of cash to pay its bills. Standard & Poor's repeated  a warning that there is a 50% chance that it will lower the U.S. credit rating within three months. The company first warned of this possibility on July 14. 


Weekly U.S. jobless claims riseU.S. jobless claims unexpectedly rose last week after declining for two weeks in a row. Claims increased  by 10,000 to a seasonally adjusted 418,000, after declining for two weeks in a row. The four-week moving average of new claims, considered a more reliable indicator of the performance of the labor market, fell last week by 2,750 to 421,250. Economists consider the economy to be adding more jobs than it is shedding when  the weekly claims number falls below 400,000.


German business confidence fallsGerman business confidence fell more than expected in July, according to the Ifo Institute's business climate index, which dropped to its lowest level in nine months.



U.S. home sales fallSales of previously owned homes fell 0.8% in June to a seasonally adjusted annual rate of 4.77 million, the lowest level in seven months, amid weakness in the job market and overall economy. It was the third-straight monthly decline and worse than forecast. Also in June home construction rose to the highest level in five months. Compared with the same month a year earlier, new home construction was up 16.7%; however construction is still below a healthy level, which economists say would be a pace of 1 million to 1.5 million units. In June, that annual level was at 629,000. Meanwhile, the National Association of Home Builders reported that confidence among homebuilders rose in July from June but remained at depressed levels as the housing market continued to struggle.


U.S. leading indicators riseThe Conference Board reported that its index of U.S. leading indicators rose 0.3% in June  from a 0.8% increase  in May. The gauge measures the outlook for the next three to six months.


U.S. and global corporate news



Morgan Stanley performance surprises investorsMorgan Stanley posted a smaller-than-expected second-quarter loss, which sent the company's stock surging the most in two years. The loss came from a $1.7 billion charge related to the conversion of Mitsubishi UFJ Financial Group's preferred Morgan Stanley stake. Morgan Stanley posted a 14% gain in trading revenue and was the only major U.S. bank to report a gain in this area. Bank of America reported losses of $8.83 billion in the second quarter as mortgage-related charges outweighed lower credit costs. Goldman Sachs Group's second-quarter profit came in at $1.05 billion, significantly lower than expectations, after market conditions led the firm to reduce risk taking to the lowest levels in five years. Even so, profits rose 77% from $613 million a year ago.



Tech companies report strong profitsApple's fiscal third-quarter earnings more than doubled, exceeding analysts' expectations, as the company reported surging sales of the iPhone and iPad. Microsoft's profit rose 30% in its fiscal fourth quarter helped by the software and service contracts of its corporate customers. IBM reported an 8% increase in net income as the 100-year-old company got a boost from robust sales of new models of its mainframes. The company also lifted its profit forecast amid buoyant demand for software. Intel, the world's largest chipmaker, reported that its sales rose 21% while net income rose to $2.95 billion from $2.89 billion in the year-earlier quarter. The company also forecast third-quarter sales that exceeded some analysts' estimates. EMC reported a 28% gain in second-quarter earnings as companies increased spending on storage products and software for Internet-based computing, and eBay reported a 25% jump in revenue, while net income fell 31%.


Coke, Johnson & Johnson, and Harley-Davidson announce resultsCoca-Cola's second-quarter profit rose 18%. The company got a boost from a bottler acquisition and from strong volume growth overseas. Johnson & Johnson reported a 20% decline in second-quarter profit on costs associated with its exit from its heart-device business and product recalls. Profits, however, exceeded Wall Street expectations. Harley-Davidson, the largest U.S. motorcycle manufacturer, said profit rose after it increased sales in the U.S. market for the first time in almost five years.



Borders to liquidate remaining storesBorders was forced to liquidate its remaining 399 stores after receiving too few bids in a bankruptcy auction. The company, which employs about 10,700 people, is now expected to go out of business by the end of September.


Zillow raises $69.2 million in IPOZillow, the online real estate information service, raised $69.2 million in its initial public offering.


Express Scripts to buy Medco; CNOOC to purchase OPTI CanadaExpress Scripts agreed to buy Medco Health Solutions for $29.1 billion in cash and stock. In merging, the companies will form the largest manager of drug prescription services with nearly a third of the market. China's largest offshore-oil producer, CNOOC, agreed to buy bankrupt Canadian oil sands developer OPTI Canada for about $2.1 billion. The agreement comes as China seeks to invest in energy projects amid a global commodities boom. In past deals, Chinese firms have targeted minority stakes in Canadian companies.



Harry Potter movie sales set recordThe last of the long-running series of Harry Potter films, Harry Potter and the Deathly Hallows — Part 2, from Time Warner's Warner Bros. Pictures set a sales record for its U.S. opening and took in nearly one half a billion dollars worldwide.

The week ahead

• 3M, Boeing, Exxon Mobil, DuPont, Merck, and Chevron report earnings next week.
• The Standard & Poor's/Case-Shiller Composite-20 Home Price Index is released on Tuesday, July 26.
• The Conference Board reports on consumer confidence on Tuesday, July 26.
• The European Commission publishes its consumer confidence indicator for the eurozone on Thursday, July 28.
• The Nomura/JMMA (Japan Materials Management Association) Purchasing Managers' Index is released Thursday, July 28.

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.

MARKET WEEK: JULY 11, 2011

The Markets Friday's disappointing employment numbers took the edge off equities' earlier gains, but the domestic indices managed to remain in the plus column for the week. The small-cap Russell 2000 and the NASDAQ had the strongest showing. Meanwhile, Treasury bonds benefitted from the anxiety caused by the bad jobs report; the 10-year yield reversed much of its 34-basis-point jump of the previous week.

Market/Index 2010 Close Prior Week As of 7/8 Week Change YTD Change DJIA 11577.51 12582.77 12657.20 .59% 9.33% NASDAQ 2652.87 2816.03 2857.60 1.55% 7.80% S&P 500 1257.64 1339.67 1343.81 .31% 6.85% Russell 2000 783.65 840.04 852.57 1.49% 8.79% Global Dow 2087.44 2156.11 2148.99 -.33% 2.95% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 3.22% 3.03% -19 bps -27 bps Last Week's Headlines After two months in which the jobless count remained relatively static, the unemployment rate rose slightly in June to 9.2%. According to the Bureau of Labor Statistics, only 18,000 new jobs were added to the nation's payrolls. That's dramatically lower than both the average 215,000 jobs added monthly between February and April and gains seen in a report on private-sector payrolls earlier in the week. Long-term unemployed workers (those without a job for 27 weeks or more) represented 44.4% of the total, and including underemployed workers would push the unemployment rate to 16.2%. Most private-sector industries saw little change, while government employment continued to trend down. It was Portugal's turn to be the focus of euroangst. Moody's downgraded the country's sovereign debt to Ba2 (non-investment grade) with a negative outlook, indicating further downgrades are likely. The downgrade also helped push up borrowing costs for other troubled eurozone countries, including Italy. Meanwhile, Standard & Poor's warned that a restructuring of Greek debt would be considered a "selective default." The European Central Bank raised a variety of interest rates for the second time this year, increasing its benchmark rate to 1.5% to try to combat inflation that is running at roughly 2.7%. The Bank of China raised its primary rate from 6.31% to 6.56%; a 5.5% inflation rate there brought on the third increase this year. By contrast, the Bank of England kept its key rate stable at 0.5%. Discussions continued between the White House and congressional leaders on how to tackle deficit disputes--at least temporarily--and pass legislation raising the nation's borrowing limit before the Treasury's August 2 deadline. Though the U.S. services sector declined 1.3% in June from the previous month, the Institute for Supply Management's index still remained above 50, indicating expansion for the 19th consecutive month. Eye on the Week Ahead Alcoa's Monday announcement represents the unofficial kickoff of the second-quarter earnings season. Minutes of the Fed's last meeting could provide additional insight into members' post-QE2 outlook, and inflation data will be watched for signs of acceleration. Finally, as the debt deadline nears, it could have an effect on investors' psyches. Key dates and data releases: Federal Reserve Open Market Committee (FOMC) minutes, international trade (7/12); wholesale inflation, retail sales (7/14); consumer inflation, industrial production (7/15). 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--

Market Week: Week ending July 1, 2011

The Markets Greek revival: After domestic equities' weeks-long downdraft, last week's five straight days of fireworks were something to celebrate. The Dow had triple-digit gains on all but one of those days, while the Global Dow gained more in a single week than it did in the entire first quarter. The S&P 500 had its biggest percentage gain since mid-2009, while the NASDAQ and Russell 2000 built on the prior week's strong performances. However, the renewed confidence in equities wasn't good news for Treasury debt. As the Fed's QE2 bond-buying program came to an end, the yield on the 10-year note had its biggest weekly gain of the year, pushing prices down.

Market/Index 2010 Close Prior Week As of 7/1 Week Change YTD Change DJIA 11577.51 11934.58 12582.77 5.43% 8.68% NASDAQ 2652.87 2652.89 2816.03 6.15% 6.15% S&P 500 1257.64 1268.45 1339.67 5.61% 6.52% Russell 2000 783.65 797.79 840.04 5.30% 7.20% Global Dow 2087.44 2041.17 2156.11 5.63% 3.29% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 2.88% 3.22% 34 bps -8 bps Last Week's Headlines The Greek parliament approved a €78 billion package of budget cuts, tax increases, and asset sales. The austerity measures were needed to forestall default on the country's bonds in two weeks, obtain another installment of last year's bailout package, and enhance the odds of receiving future aid. Whether they signal better things to come or simply the start of the traditional home-buying season, home prices were up by a welcome 0.7% in April. It was the first increase in eight months for the S&P/Case-Shiller home price index. Consumer spending stalled in May but the 0.3% lift in incomes roughly equaled April's increase, according to the Bureau of Economic Analysis. However, adjusted for inflation and taxes, income was up 0.1%, and inflation-adjusted spending fell 0.1%. U.S. manufacturing accelerated in June, rising 1.8%; new orders, production, and inventories also rose during the month. It was the 23rd consecutive month of expansion in the sector, according to the Institute for Supply Management. Construction spending fell slightly in May, the Commerce Department said, and was 7.1% below that of last May. French Finance Minister Christine Lagarde was named to replace Dominique Strauss-Kahn as managing director of the International Monetary Fund, which plays a key role in international assistance for Greece. Eye on the Week Ahead After last week's strong gains, the possibility of some profit-taking can't be ruled out as traders return from the holiday weekend. The latest unemployment data on Friday will also be of interest, and the European Central Bank will meet on Thursday to decide whether to raise interest rates. Key dates and data releases: factory orders (7/5); U.S. services sector (7/6); unemployment/payrolls (7/8). 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: 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--