It wasn't exactly the rebound Wall Street had expected. 

The Dow closed solidly higher Monday despite more anxiety about Wall Street banks but the Nasdaq Composite failed to rally even as Apple released plans for a 3G iPhone. 

Today's Market

The Dow Jones Industrial Average rose 70.51 points, or 0.58% to 12280.32, the Standard & Poor’s 500 index gained 1.08 points, or 0.08%, to 1361.76 and the Nasdaq Composite Index lost 15.10 points, or 0.61%, to 2459.46. The consumer-friendly Fox 50 picked up 1.40 points, or 0.15%, to 958.75.

Experts had expected a more clear-cut rebound for Wall Street after the Dow plunged 400 points on Friday, its worst day since February 2007. However, banks fell sharply on Monday after Lehman Brothers (LEH) released ugly second-quarter results and a capital raise. 

“There's been a lot of psychological damage done to the market. It’s going to take some time for the market to hold," said Peter Cardillo, chief market economist at Avalon Partners. 

Wall Street was also buzzing about a much-needed $4 decline in crude oil prices and a new report that showed an unexpected rebound in April pending home sales. 

Aluminum giant Alcoa (AA) led the Dow on Monday, soaring to a three-week high thanks to a positive mention in Barron's over the weekend. Also, McDonald's (MCD) rose sharply on its solid May same-store sales report. On the downside, JPMorgan Chase (JPM) tumbled 6.5% to lead the decliners on the index.

The S&P, which is a broader indicator of the stock market, ended the day basically unchanged. The Dow's upward move was exaggerated by Alcoa and McDonald's big gains. 

The Nasdaq Composite failed to gain any traction on Monday, falling as much as 1.5% at some points. Apple (AAPL) had led an earlier tech selloff but the stock halved its losses once the company released plans for a new 3G iPhone to be released on July 11. Other big-name tech stocks like Google (GOOG) also weighed down the index. 

Financial stocks were the biggest drags on the stock market on Monday after Lehman Brothers (LEH) posted a $2.8 billion loss and announced a $6 billion capital raising by struggling investment banks. 

While a loss and a large investment had been anticipated, both figures were higher than the market had been expecting, sending Lehman's stock price almost 10% lower. In fact, Lehman's loss was four times larger than the most pessimistic estimate. It was also its first ever quarterly loss. 

Lehman has been one of the biggest victims of the credit crunch and subprime debacle due to its large exposure to the residential and commercial mortgage market. The stock has lost more than half of its value in 2008 and was recently punished due to fears the bank has a shortage of cash. Lehman has issued multiple statements since the Bear Stearns collapse in mid-March to assure the market it has more than enough liquidity. 

Meanwhile, analysts at Lehman reportedly slashed the earnings outlooks on several large banks, including JPMorgan Chase, Bank of America (BAC) and Citigroup (C). All three financial companies, which are components of the Dow, traded sharply lower on Monday. 

Washington Mutual (WM) plunged to a 16-year low after UBS (UBS) cut its price target on the bank to $8.50, according to Reuters. UBS also reportedly slashed its 2008 forecast to reflect a loss of $4.45 per share and upgraded its credit loss prediction to $27 billion into 2011.

Crude oil futures pulled back significantly on Monday thanks to a rebound for the U.S. dollar, which was helped by positive comments by Treasury Secretary Hank Paulson. 

Oil settled $4.19 lower in New York at $134.35 a barrel. While the decline was welcomed by Wall Street, it likely did little to erase the memory of last week's huge surge. 

Wall Street was paralyzed by the enormous rally in crude on Friday, which doubled the previous one-day record that had been set the day before. All told, crude soared $16 in a span of less than 48 hours, pushing gasoline prices to a nationwide average of $4.04 a gallon. 

Experts blamed Friday's huge rise in oil prices on the falling U.S. dollar, fears of an Israeli air strike in Iran, speculation and a Morgan Stanley (MS) prediction of $150 oil by July 4. 

Goldman Sachs (GS) predicted that a "superspike" in crude oil is coming sooner than expected and that prices will "easily" spike over $150 a barrel, according to Dow Jones. The bank previously predicted that oil would hit $150 to $200 a barrel by the end of the year due to increasing global demand and a weakening U.S. dollar. 

The National Association of Realtors said April pending home sales jumped 6.3% from March. However, sales are still off by more than 13% from a year ago. Economists surveyed by Dow Jones had been expecting an unchanged reading from the industry group.  Shares of home builders like Toll Brothers (TOL) and KB Home (KBH) initially rose on the news but then closed flat. 

Corporate Movers

AIG (AIG) CEO Martin Sullivan is facing a possible shareholder rebellion as the firm continues to be hit by mounting losses and a plummeting stock price, The Wall Street Journal reported. Several major fund managers said AIG has suffered "a staggering breakdown of risk controls" and "an unequivocal loss of investor confidence." The large investors asked the board for a meeting to discuss "steps that can be taken to improve senior management and restore credibility,” according to the Journal.

Apple (AAPL) released plans for a 3G iPhone that will be released on July 11 in 22 countries. The 16-gigabyte version of the popular decide will sell for $299, while the 8-gigabyte model will go for $199. Apple CEO Steve Jobs announced the new version of the iPhone at the Worldwide Developer Conference in San Francisco.

AT&T (T) closed lower after it warned its new agreement with Apple will likely "result in some pressure on margins and earnings, reflecting the subsidized device pricing." The pressure translates to a 10 to 12 cent per share dilution in its 2008 earnings. AT&T is the exclusive domestic carrier of the iPhone. 

McDonald's (MCD) reported its same-store sales rebounded in May, rising 7.7% globally and 4.3% in the U.S. on new menu items and its breakfast performance. McDonald's led the Dow in Monday morning trading. 

Amlyn Pharmaceuticals (AMLN) fell sharply after Jeffries & Co. reportedly downgraded the stock to “hold” from “buy” on worries about its diabetes drug competition. The downgrade came after an American Diabetes Association presentation in San Francisco, according to Thomson Reuters.

Pier 1 Imports (PIR) released plans to purchase home furnishing retailer Cost Plus (CPWM) for $88 million. The deal, which values Cost Plus at a 31% premium of $4 a share, is subject to both companies' shareholder approval. Shares of Pier 1 plunged 21 on the deal while Cost Plus rose just 2%.

CIT Group (CIT) rose on a new $3 billion line of credit from Goldman Sachs. The deal gives CIT a 15-year securities-based partnership with Goldman. CIT, which is a commercial finance company, said it will use the funds to finance existing assets and new originations. 

Mosaic (MOS) closed nearly 6% higher after the agricultural products producer was added to the Goldman Sachs conviction buy list, according to Dow Jones. Goldman also upped its price target on Mosaic to $195 from $165. 

Krispy Kreme Doughnuts (KKD) soared after it posted a first-quarter profit of $4 million, or 6 cents per share. The company's revenue fell by 7% to $103.6 million. 

World Markets

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, rose 0.64 points, or 0.02%, to 3597.34. The FTSE 100, London's benchmark index, lost 29.20 points, or 0.49%, to 5877.60.

On the continent, Paris's CAC 40 Index rose 4.06 points, or 0.08%, to 4799.38 while Germany's DAX picked up 11.82 points, or 0.17%, to 6815.63.

The Asian markets closed sharply lower on Monday in response to Friday's U.S. stock downturn.

Tokyo's Nikkei 225 Index lose 308 points to 14181.39. In Korea, the Kospi closed down 23.35 points to 1808.96. Hong Kong's stock exchange was closed for a holiday.