Dear Subscribers,

This is Sheraz Mian filling in for Steve Reitmeister while he's away today.

Stocks remained in the red last week as the debt debate refused to come to a an end. With the deadline date now literally in our face, we will likely get a temporary debt ceiling increase and leave the thornier deficit issue for a later date.

What this course effectively ensures is a rating downgrade from at least one of the agencies. They have been threatening a downgrade all along if the debt deal failed to address the deficit issue. But judging from the response of the bond market, a rating downgrade may not exactly be the end-of-the-world event after all. The stock market, it appears, did not get this memo.

A much bigger problem than the Debt Drama is the economy's near-term growth prospects after the GDP report spilled the beans on Friday. Not only was the second quarter's growth much weaker than expected, but whatever growth we thought the economy had in the preceding quarters was revised down. Turns out, the U.S. economy was in much worse shape in the first half of the year than anyone knew.

The key issue now is what impact this new knowledge will have on growth expectations for the coming quarters. I would expect the growth worries to take back center stage as the Debt Drama comes to an end.

Featured Commentaries on Zacks.com
•  Trading the Debt Ceiling Debate
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•  Read 'Em & Weep: GDP in Depth, pt. 1

Best

Sheraz Mian
Director of Research

Today's Top Stories: Monday- August 01, 2011

ZACKS RANK BUY STOCKS

• Aggressive Growth - W. R. Grace & Co. (GRA) revenues were up 21%, to $826 million due to both higher volumes and pricing. That works out to $1.11 per share, and impressive 22 cents higher than the Zacks Consensus Estimate. Read More...
   
• Growth & Income - TAL International Group, Inc. (TAL) second-quarter earnings per share came in at 99 cents, crushing the Zacks Consensus Estimate of 82 cents. It was an increase of over 100% from the same quarter in 2010. Read More...
   
• Momentum - Patterson-UTI Energy (PTEN) earnings looked good coming in at 52 cents, 8% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 9% over the last four quarters. Read More...
   
• Value - Crane Company (CR) has raised its dividend from 18 cents per share to 26 cents. The 26 cent quarterly dividend is 13% higher than the previous quarter's payout. The increase has pushed up the yield to 2.2%. Read More...
   

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

• Bull Of The Day: Celanese Corporation
  Full Zacks research report: Read More...
  
  
• Bear Of The Day: Federated Investors, Inc.
  Full Zacks research report: Read More...
  
  
• Ahead of Wall Street
  Read More...
  


• Zacks Industry Outlook: Restaurant Industry Stock Review - July 2011
  The restaurant industry is finally showing improvements and seems poised for long-term growth. Read More...
  
  
• Analyst Blog Highlights
• Montpelier Bottom Line Lags
• Synovus Trims Losses Significantly
• McKesson Impresses, Ups View
• Full Analyst Blog

• Growth & Income Stock Picks-July 28, 2011
• Earnings Machines for Doubles, Triples, and 5-Baggers
• RadioShack Hangs Up on T-Mobile

PeopleAndPicks.com:

VIP "InvestmentMAGE" is gaining momentum with BUY calls in (HMN), (NWS), (RIG) and (SPXU). Read More...

EARNINGS PREVIEW Earnings Season Peaks

There will be over 1000 earnings reports next week, along with key data like the jobs report, but all that is likely to be overshadowed by the debt ceiling deadline on Tuesday. Read More...

• Boehner vs. Reid: Where they meet @ CNNMoney.com
• Week Ahead: Debt Negotiations and Job Report @ FOXBUSINESS.com

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

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