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Capon's maximum likelihood method (MLM) is being used increasingly for improved localization and high resolution of sources in matched-field processing (MFP) in a waveguide environment. When the noise component is dominated by modal noise (this is, noise due to excitation of the modal structure of the waveguide by distant sources of acoustic energy, e.g., wave action, distant shipping), the MLM can become unstable; when the number of modes (M) supported by the waveguide is considerably less than the number of sensors (N), a 'reduced' MLM is available to stabilize the processing Byrne et. al., J. Acoust. Soc. Am. 87, 2493-2502 (1990). In this paper the sector-focused stability (SFS) methods of Byrne and Steele (Proc. IEEE., ICASSP 1987) are employed to treat the case of M nearly equal to N. Simulations, using a shallow- water range-independent environment, are presented to illustrate the increase in stability of SFS over MLM in the presence of phase errors on the sensors or more general mismatch. (Author), Pub. in Jnl. of the Acoustical Society of America, v88 n6 p2843-2851 Dec 1990.