Dow gains, Nasdaq wanes
Wall Street sees a choppy session as investors consider Apple, Lehman, falling oil prices and some cautious comments from Fed officials.
NEW YORK (CNNMoney.com) -- The Dow gained and the Nasdaq declined in a choppy session Monday, as investors eyed Lehman Brothers' big loss, Apple's new iPhone announcement and some cautious talk from a pair of Fed officials.
Oil prices retreated more than $4 a barrel, but failed to reassure investors worrying about inflation.
The Dow Jones industrial average (INDU) gained 0.6%, after having been on both sides of unchanged throughout the session. The broader Standard & Poor's 500 (SPX) index ended just above unchanged. The Nasdaq composite (COMP) lost 0.6%.
Stocks struggled throughout the session Monday as investors weighed the day's competing influences in the aftermath of Friday's steep selloff. However, stocks managed to close off the lows of the session, which could be seen as a positive, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.
On Friday, the Dow tumbled 395 points as the dollar slumped, oil prices rallied $11 a barrel, and a weak jobs report revived recessionary fears. Considering the depth of that selloff, trading Monday could have been worse, Ghriskey said.
Investors were putting some of Friday's broader negatives in perspective Monday, Ghriskey said. "People are starting to realize that the Fed is probably going to lift interest rates later this year, the dollar is going to stabilize and commodity prices should come down a bit."
Yet that doesn't mean stocks are likely to move higher anytime soon, he said, noting that there's still a tremendous amount of confusion there.
"Lehman Brothers today showed us that the financial sector is still having problems," said Donald Selkin, chief market strategist at National Securities. "Until that situation is straightened out, I don't see how we can have a sustained move upwards."
Lehman's quarterly loss dragged on its stock and the broader bank sector. Meanwhile, Apple (AAPL, Fortune 500) shares plunged 2.2% as the company announced a cheaper, faster iPhone at the World Wide Developers Conference in San Francisco. (Full story).
With financial and technology stocks sliding, the market was deprived of its two most-significant leadership sectors, Selkin said. He noted that the Dow only managed to close higher because of strength in its commodity stocks and McDonald's, which issued surprisingly strong May sales.
"We're fragile after Friday's selloff and you're seeing the Nasdaq get hit the worst today," said Joseph Saluzzi, co-head of equity trading at Themis Trading. "The Fed speak has been a factor, too, with a few guys coming out talking about the inflation risks."
A pair of Fed officials issued comments adding to concerns that the central bank may have to raise interest rates later this year to counter higher inflationary pressure. New York Fed President Timothy Geithner gave a speech to that effect, as did Dallas Fed President Richard Fisher.
In other news, presumptive Democratic presidential nominee Barack Obama has called for Congress to inject another $50 billion into the economy amid the economic downturn.
And the pending home sales index - a measure of sales under contract to sell - rose 6.3% in April, versus forecasts for a drop.
Company news: Lehman Brothers (LEH, Fortune 500) reported a steep $2.8 billion second-quarter loss and said it plans to raise $6 billion in additional capital. Following the news, ratings agency Moody's cut its outlook on the company to "negative" from "stable." Shares fell more than 7%.
Worries about the outlook for troubled lender Washington Mutual (WM, Fortune 500) sent shares down 17%.
A variety of other financial shares dragged, including JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500). That knocked the Philadelphia Bank sector index down by over 3%.
Elsewhere in the financial sector, CIT (CIT, Fortune 500) gained more than 3% on news that it has agreed to a $3 billion long-term committed financing facility that Goldman Sachs (GS, Fortune 500) will provide.
On the upside, Dow component McDonald's (MCD, Fortune 500) reported a 7.7% rise in May sales of stores open a year or more, topping forecasts for a rise of 3.6%. Shares gained more than 4%.
Fellow Dow component Honeywell (HON, Fortune 500) said it is selling its consumables solutions business to BE Aerospace (BEAV) for $1.05 billion.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.35 billion shares. On the Nasdaq, decliners topped advancers 2 to 1 on volume of 2.13 billion shares.
Gas hits new record: The national average price for a gallon of regular unleaded gas rose to a record $4.023 from a record 4.005 the previous day, AAA reported.
Oil prices slumped, with U.S. light crude oil for July delivery losing $4.19 to settle at $134.35 a barrel on the New York Mercantile Exchange.
Other markets: The dollar gained versus the euro and yen, recovering after its recent slide.
Treasury prices slumped, raising the yield on the 10-year note to 3.99% from 3.91% late Friday. Bond prices and yields move in opposite directions.
COMEX gold for August delivery fell 90 cents to $898.10 an ounce. 
