JDfn Daily Digest - November 20, 2008

The government said new applications for jobless benefits rose by 27,000 to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. The four-week average of claims, which smoothes out fluctuations, rose to 506,500, the highest in more than 25 years.

Manufacturing conditions in the Philadelphia region continued to deteriorate in November. The Philly Fed diffusion index fell to negative 39.3 in November from negative 37.5 in October. The index crashed last month from 3.8 in September. Readings below zero indicate contraction.

The Conference Board said more economic weakness is in store. The index of leading economic indicators fell 0.8% in October, with negative contributions from six of the 10 indicators. Only the money supply and the interest rate spread were positive in October, indicating that the Fed is leaning hard against the downturn. The index has fallen at a 4.7% annual pace in the past six months.

According to Freddie Mac, U.S. fixed-rate mortgages fell for the third straight week. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 6.04% in the week ending Thursday, down from last week's 6.14% and the year-ago 6.20%.

Senate Majority Leader Harry Reid canceled plans for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. The leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 million jobs.

GMAC has filed to become a bank holding company, joining the growing list of lenders making such a move in a bid to secure U.S. Treasury funds. GMAC said its application for funds from the government's $700 billion Troubled Asset Relief Program is conditional on its becoming a bank.

Saudi Prince Alwaleed bin Talal says he plans to increase his stake in Citigroup (C) to 5 percent. Prince Alwaleed, who currently holds less than a 4 percent stake, has been buying shares of Citi believing they are undervalued and that the bank has been taking necessary steps to improve its operations amid the ongoing credit crisis.

Wal-Mart Stores Inc. (WMT) says it has invested in a wind energy farm in Texas that will generate enough power to light 54 of its stores. Wal-Mart said the Duke Energy (DUK) farm is being built in Texas, and is to start production in April.

Natural gas producer XTO Energy Inc. (XTO) said it has budgeted $3.3 billion for development and exploration expenditures in 2009. In addition, $500 million has been budgeted for the construction of pipeline infrastructure and compression and processing facilities. The company also said it would commit $1.25 billion to debt reduction.

Vietnam has opened a new oil field that will boost national crude oil output by 21 percent by the end of this year. Four wells from the Golden Lion oil field off Vietnam's southern coast are now producing 60,000 barrels per day.

Rolls-Royce Group Plc said it plans to cut up to 2,000 jobs next year as demand for its products slumps amid the global economic downturn. The world's second largest maker of aircraft engines said it plans to slash 140 jobs at its aerospace assembly and test facility in Derby, England.

Pfizer Inc. (PFE) announced that it has withdrawn an application to make 50-milligram Viagra tablets available over the counter in Europe. Pfizer said it believes Viagra meets the European Commission's criteria for switching to nonprescription status.

Scheduled U.S. Economic Reports (Friday)

No economic reports are scheduled on Friday but Federal Reserve Bank of Philadelphia President Charles Plosser will speak Friday afternoon about the current financial crisis.

In Earnings News

Barnes & Noble (BKS) reported a loss of $18.4 million, or 34 cents per share. That compares with a profit of $4.4 million, or 7 cents per share, a year earlier. The company's loss was 21 cents per share excluding a charge. Analysts expected a loss of 16 cents per share.

Suntech Power Holdings Co. (STP) lowered its 2008 revenue forecast due to concerns over the weakened euro compared with the U.S. dollar. The company revised its 2008 revenue forecast to a range of $1.85 billion to $1.87 billion.

New York & Company Inc. (NWY) said its loss narrowed in the third quarter, despite a big drop in sales at established locations. For the quarter, the company reported a loss of $7.9 million, or 13 cents per share. Analysts expected a loss of 10 cents per share.

Wet Seal Inc. (WTSLA) said it returned to profitability in its third quarter. The company reported net income of $6.8 million, or 7 cents per share. The results matched the expectations of Wall Street analysts.

Scheduled Earnings Reports (Friday)

Books-A-Million, H.J. Heinz, Kirklands, Ann Taylor Stores, JM Smucker Co., G-Tech Holdings

Stocks in the News

BASF (BASFY) cut to sell from hold by Citi.

Gymboree Corp (GYMB) third-quarter profit rose to $30.9 million, or $1.06 a share, from $26.9 million, or 91 cents a share, in the year-ago period.

PetSmart Inc (PETM) reported its third-quarter net income rose to $35.8 million, or 28 cents a share, from $29.5 million, or 23 cents a share, in the year-earlier quarter.

Intuit Inc (INTU) said its fiscal first-quarter net loss widened, and it cut its sales and profit guidance for fiscal 2009.

Ambac Financial Group (ABK) said it has commuted about $3.5 billion in collateralized debt obligation exposure for $1 billion in cash.

Dick’s Sporting Goods (DKS) is estimated to report a profit of 6 cents a share in the third quarter.

Sara Lee Corp (SLE) said it has decided to exit the kosher meat business and will close its kosher meat processing plant in Chicago by the end of January. The closure will affect 185 jobs.

Frutarom Industries Ltd (FRUTF), the Haifa, Israel, producer of flavors and fine ingredients, reported third-quarter net income rose 61% on 37% higher revenue.