Markets traded down for the majority of the trading period as investors are cautious on the sustainability of the recent market rally of nearly 40% since its March lows.  However, a late afternoon surge bolstered the indices upward to close marginally flat on the day; the Dow Jones Industrial Average was up 1.36, or 0.2%, to 8,764.49 as Cisco Systems and Travelers, Inc officially replaced Citigroup and General Motors.  Both the NASDAQ and S&P 500 were down 7.02 and 0.95, or 0.38% and 0.10%, to close at 1,842.40 and 939.14 respectively.   Commodities fell today as crude lost $0.35 to settle at $68.09 per barrel and gold decreased $10.10 to close at $952.50.  Prices on 10-year bonds fell marginally as well, pushing the yield up 0.0270 to 3.889%.   The biggest gaining sector today was Financials, finishing 1.1% higher as investors increased buying volume ahead of the Fed’s official announcement of which companies will be allowed to repay TARP money because banks have showed eagerness to pay back the rescue package.

Tech news has anxiously been awaiting Apple’s annual WWDC, but the market had mixed reactions for its unveiling of the 16-gigabyte iPhone 3G S for $199, while cutting its year old 8-gigabyte iPhone 3G to $99 to sustain its momentum for its cash-strapped customers.  The new iPhone 3G S has the same appearance but features a faster processor, longer battery life, a video camera, a photo camera with improved resolution and auto focus and an internal compass.  The company also slashed prices on its popular macbooks by as much as $300, although still priced at a premium to its rivals Dell and Hewlett-Packard.  Apple also released the Mac OS X Snow Leopard, which will cost previous users of this operating system $29 to upgrade.  Apple shares fell $0.82 or 0.57% today as its exclusive carrier AT&T saw share drops of $0.16 or 0.65%.  In other IT news, Texas Instruments raised Q2 EPS view from $0.01-0.15 to $0.14-0.22 and revenue to $2.3-2.5 billion, further indicating a possible bottom in semiconductor cycles.  Shares jumped 5% after hours citing strength in analog chips used in everything from phones and consumer electronics to cars and industrial equipment.

In consumer discretionary news, McDonald’s reported same-store sales up 5.1% in May, with strength in international markets while domestic sales lagged behind with a mere 2.8% gain.  Recent success for the company can be attributed to its new McCafe espresso-cased coffees being introduced across the U.S.  A stronger dollar hurt overall sales as they fell 0.4% during the month, thus the stock traded as low as 3.5%  and finished the day down$1.15, or 1.92%.  Pep Boys (PBY) reported fiscal first-quarter earnings after the market closed today; net income came in at $10.9 million or $0.21 per share, beating analysts estimates of $0.7 per share.  The stock surged after hours nearly 7% despite revenue and same store sales both falling 0.3%.  Pep Boys has been a bright spot amidst the automotive industry as Ford and GM continue to see future headwinds.  Supreme Court Justice Ruth Bader Ginsburg delayed Chrysler’s sale of most of its asset to Italy’s Fiat, saying the sale “stayed pending further order.”  Real estate showed further weakness today as Sunstone Hotel Investors Inc stated it will default on a San Diego hotel, and analysts predicted that more hotels may follow.  Obama also promised to create or save 600,000 jobs this summer by speeding up federal money into hundreds of public works projects.

Stop back tomorrow for another Daily Market Recap at Bullish Bankers.

- Jake Kimble

Disclosure:  The fund the author is associated with is long CSCO.

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