Dear Subscribers,

This is Sheraz Mian filling in for Steve Reitmeister while he's on vacation.

Noisy protests in Athens against the Greek government's tough austerity measures and a rating agency's negative report on Portuguese banks brought Europe’s debt problems front and center once again. And having experienced this far too many times in the past year, we know how it plays out in the markets. The safe-haven trade strengthens the greenback, largely at the expense of the common currency. Yields on treasury bonds and the prices of dollar-denominated commodities come down.

Oil, the numero uno dollar-denominated commodity, had an even more direct reason to fall. A bearish government report showed rising inventories and soft demand, a sign that $4 gasoline may already be eating into demand in an otherwise seasonally high-demand environment.

With last week's rout in the commodity complex still fresh in investors' minds, oil's pullback reignited fears about the economy's growth momentum. If oil demand was falling at the outset of the summer driving season, the thinking went, then it could be a sign that the consumer was tapped out. This meant that the first quarter softness in the economy may not have been 'transitory' after all and likely carried into the current quarter as well.

The market overcame this fear last week only after the solid April non-farm payroll report on Friday. But with the next iteration of that report almost a month away, it is reasonable to expect that these fears will linger for some time.

It doesn't take much to change market sentiment. And change it will, for the better. Let's hope that the positive reversal takes place sooner rather than later.

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Best

Sheraz Mian
Director of Research

Today's Top Stories: Thursday- May 12, 2011

ZACKS RANK BUY STOCKS

• Aggressive Growth - Federal-Mogul Corp. (FDML) income more than tripled from $15 million a year ago and the EPS was 15 cents better than the Zacks Consensus Estimate. Federal-Mogul has now topped forecasts in 5 of the past 6 quarters. Read More...
   
• Growth & Income - United Stationers Inc. (USTR) reported first quarter earnings per share of 95 cents, a penny ahead of the Zacks Consensus Estimate. It was a stellar 27% increase over the same quarter in 2010. Read More...
   
• Momentum - Vitamin Shoppe, Inc. (VSI) earnings came in strong at 49 cents, 23% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 16% over the last four quarters. Read More...
   
• Value - Anixter International, Inc. (AXE) saw some pretty solid movement in estimates off a good quarter, with the current year adding close to 10% and climbing to $5.58. The next-year estimate is up 43 cents to $6.28, a bullish 13%. Read More...
   

Learn how to profit from our exclusive Zacks Rank stock-ranking system with free resources. Read More...

• Top 5 Energy Mutual Funds Read More...
• Mutual Fund Homepage

• Bull Of The Day: Polycom, Inc.
  Full Zacks research report: Read More...
  
  
• Bear Of The Day: Tower Group, Inc.
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• Ahead of Wall Street
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• Zacks Industry Outlook: Insurance Industry Stock Update - May 2011
  After enduring stress with respect to pricing pressure and reduced insured exposure through mid-2009, the overall health of the U.S. insurance industry has improved to some extent in recent quarters. Read More...
  
  
• Analyst Blog Highlights
• Lockheed Martin Hooked to On-The Move Network
• Symmetry Reiterated at Neutral
• Western Union Expands to the Philippines
• Full Analyst Blog

• First Profit
• Momentum Stock Picking
• PFP-TV: Sell in May?

EDUCATION: Growth and Income

Understanding Dividend Dates Read More...

PeopleAndPicks.com:

VIP 'MightyMo' finds relief from the market drop. "With the overall markets down today, I reiterate one of the safest stocks on the planet - Wal-Mart, which is up today." Read More...

• Stocks stumble as oil prices plunge @ CNNMoney.com
• Symantec's Turnaround Continues @ TheStreet.com
• 8 Simple Ways to Cut the Gov’t Budget @ MAINSTREET.com
• Nasdaq's Greifeld Strikes Nerve at DOJ Over NYSE Comments @ FOXBUSINESS.com

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

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