JDfn Daily Digest - September 2, 2008

The Institute for Supply Management reported that the nation's manufacturers cut back production slightly in August. The ISM index inched lower to 49.9% in August from 50% in July. The drop was unexpected. The consensus forecast of estimates was for the index to hold steady at 50%.

US construction spending fell more than expected in July, as housing construction fell to its lowest level in more than seven years. Total US construction spending fell 0.6% in July, more than the 0.3% decline economists had expected. Construction spending in June was upwardly revised to a 0.3% rise from a 0.4% decline.

Hurricane Gustav may trigger insurance claims as high as $10 billion after lashing Louisiana, making it potentially the fourth-highest total for a U.S. storm. The hurricane lost power as it headed for shore yesterday, keeping insured losses on land between $3 billion and $7 billion and oil-drilling damage at $1 billion to $3 billion.

The Semiconductor Industry Association said worldwide sales of semiconductors rose 7.6% to $22.2 billion in July or up 2.8% from June levels. Growing sales of consumer electronics, personal computers and cell phones, which make up 80% of chip demand, contributed to the rise.

Oil dropped below $107 a barrel after early reports showed Hurricane Gustav had spared major U.S. Gulf oil facilities. As the hurricane was downgraded to a tropical storm, the market refocused on bearish factors including a softer global economy, weaker demand for oil and a stronger U.S. dollar.

Korea Development Bank said it is in the hunt for troubled U.S. investment bank Lehman Brothers (LEH), confirming weeks of speculation over its intentions amid expectations the Wall Street institution is in dire need of a capital injection. Any deal would require South Korean regulatory approval.

Chinese news reports say Apple (AAPL) and China Mobile, the world’s largest cell phone carrier, are in their final stages to allow import of the Apple iPhone. A deal with China Mobile would be the capstone of an aggressive expansion program that has brought the iPhone to 43 countries and 660.5 million potential customers in 2008. China alone has more than 600 million cellphone subscribers.

General Motors Corp. (GM) and Chrysler LLC are expected to lead a drop in U.S. auto sales last month as new buyer incentives failed to stem an industry slide that began in December. The U.S. automakers, still dependent on pickups and sport utility vehicles, likely gave up more of their home market again as their shrinkage eclipsed that of Japan's car-focused Toyota Motor Corp. (TM) and Honda Motor Co. (HMC).

Boeing Co. (BA) may face a strike from its largest labor group. Leaders of the International Machinists and Aerospace Workers rejected Boeing's third and final contract proposal and recommended its workers vote to go on strike. The company offered an 11% wage hike, a 14% increase to monthly pension plans, bonus payments and other incentives in the three-year contract.

Google Inc. (GOOG) is releasing its own Web browser in a long-anticipated move aimed at countering the dominance of Microsoft Corp.'s (MSFT) Internet Explorer and ensuring easy access to its market-leading search engine. The free browser, called "Chrome," is scheduled to be available for downloading tomorrow in more than 100 countries for computers running on Microsoft's Windows operating system.

BP Plc (BP) said that its U.S. unit plans to buy a 25 percent stake in Chesapeake Energy Corp.'s (CHK) Fayetteville Shale assets in Arkansas for US$1.9 billion. BP said that a letter of intent has been signed for the deal, which comes just a month after BP America bought Chesapeake's Arkoma Basin Woodford Shale assets in Oklahoma for $1.7 billion.

Scheduled U.S. Economic Reports (Wednesday)

Retail Chain Index (Week of August 30th), Factory Orders (July)

In Earnings News

Wind River Systems Inc. (WIND) tumbled Friday after the software developer posted a strong second quarter, but investors seemed worried this will weigh on the current quarter's results. The company posted a profit of $8.8 million, or 11 cents per share. Analysts, on average, were expecting a profit of 8 cents per share.

Delia's Inc. (DLIA) increased after the teen marketing and Retail Company said its second-quarter loss narrowed as sales rose. The company's loss narrowed to $5 million, or 16 cents per share. Analysts polled, on average, predicted a loss of 17 cents per share.

NuStar Energy LP (NS) expects third-quarter earnings to exceed Wall Street targets because of strong asphalt margins. The company said it should earn at least $2.25 per share in the third quarter of 2008. Analysts, on average, expect third-quarter earnings of $1.55 per share.

Scheduled Earnings Reports (Wednesday)

Hovnanian Enterprises, Staples, Dollar General, H&R Block, Casey’s General Stores, Global Crossing, Isle of Capri Casinos, Natuzzi Spa

Stocks in the News

Allianz (AZ) traded higher after Commerzbank agreed to buy Dresdner Bank from Allianz for 8.8 billion Euros ($12.9 billion).

Regions Financial Corp (RF) was up more than 16% in early trading. Washington Mutual Inc (WM) and Wachovia (WB) also traded higher.

Elbit Imaging Ltd (EMITF) reported second-quarter net income fell 33% on 66% higher revenue.

Ericssson AB (ERIC), the world’s largest maker of wireless telecoms networks, won a $450 million contract to develop, modernize and manage the nationwide mobile network of Vietnamese operator Hanoi Telecom.

Qimonda (QI) traded higher after a Micron Technology executive was quoted over the weekend as hinting that Micron may buy the German memory-chip maker mostly held by Infineon Technologies.

ArcelorMittal (MT) and the United Steelworkers union have reached tentative agreement on a new four-year contract covering about 14,000 workers in eight states.

Sciele Pharma Inc (SCRX) was up more than 50% after Japan's sixth largest pharmaceutical company by market capitalization, said it will acquire the Atlanta pharmaceutical firm for $31 a share, or $1.4 billion.