U.S. economic news for the week ended April 16, 2010

More signs of consumer spending

Retail sales surged 1.6% in March. The increase, which is the largest in four months, is encouraging some analysts to upgrade their assessments of the economy's ability to generate a sufficient number of jobs to sustain the recovery. Companies are said to have benefited from an earlier Easter, better weather, and a pickup in hiring. Recovery in the retail area is seen as an indication that the expansion is no longer solely dependent on manufacturing gains. In March manufacturing activity rose 0.9% as stronger sales and inventories gave a boost to factory production. Housing startsrebounded to a 16-month high in March, a pickup suggests that the burst of stronger home sales has persuaded a few builders to ramp up construction again. Starts climbed to an annual rate of 626,000 for the month of March, up 1.6% from February.

Bank of America posted its first profit in three quarters; although its income fell about 10% from where it was a year ago. Profit gains in the first three months of the year were helped by a surge in investment banking revenue. Overall revenue for the quarter dropped 11%.

Charles Schwab's first-quarter profits fell by nearly one-half their levels of a year ago, as low interest rates and a trading revenue decline of nearly one-fifth affected its results.

The New Jersey Transit board of directors agreed on a 25% fare increase for trains and New York City-bound buses to help the nation's third-largest transit system close a $300 million deficit. CSX reported that profits climbed 24% as freight volume rose 5% overall.

Global economic news

Greece requests meeting to discuss aidGreek Prime Minister George Papandreou asked for a meeting next week in Athens with the European Union, the International Monetary Fund, and the European Central Bank. Talks will begin among the groups, which agreed to back a 45 billion loan package. The request came this week after Greek 10-year yields rose to 7.255%, near where the rate stood before the 45 billion rescue package was unveiled on April 11. 

China's economy grows 11.9%

China 's economy expanded 11.9% in the first quarter from a year earlier. This was the biggest gain since the second quarter of 2007. Also this week, China announced plans to cool its real-estate market amid concern that an asset bubble may have been created. The announcement is thought to reflect a policy shift aimed at significantly tightening the supply of credit for home purchases.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.

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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times.