Despite a sell-off in Chinese stocks and higher oil prices, the Dow and S&P 500 posted record closing highs on Monday. Light sweet crude oil deliverable in July rose $1.06 to $66.14 per barrel. In corporate news, Wal-Mart Stores Inc (WMT) rose after announcing plans to cut the number of new super-center openings and buy back $15 billion of its shares. Palm Inc. (PALM) also moved higher after confirming it sold a 25% stake to a private equity firm for $325 million. For the day, the DJIA gained 0.06% and the NASDAQ rose 0.17%.

Profit warnings in the retail sector and comments by Federal Reserve Chairman Ben Bernanke about inflation risks drove the markets into negative territory on Tuesday. Credence Systems Corp (CMOS) fell after the company reported a fiscal second quarter earnings-per-share loss of $0.02. Bed Bath & Beyond (BBBY) also fell after missing earnings forecasts. Avaya Inc. (AV) rose after announcing it had agreed to be acquired by a private equity firm for $8.2 billion. For the day, light sweet crude oil fell $0.61, the DJIA fell 0.59% and the NASDAQ fell 0.27%.

Stocks finished lower again on Wednesday amidst continued concerns about inflation. In corporate news, the Federal Trade Commission is seeking to block Whole Foods (WFMI) from buying Wild Oats (OATS), arguing that such a deal would reduce competition and quality while raising prices. Johnson Controls Inc (JCI) rose after announcing plans to expand its building systems and controls business. Panera Bread (PNRA) fell after the company cut its forecast for second quarter profits and sales citing increased costs for gasoline and less demand for breads and bagels. Guess? Inc. (GES) rose after the company’s fiscal first quarter earnings-per-share came in higher than expected. For the day, the DJIA and NASDAQ lost 0.96% and 0.92% respectively.

Rising treasury yields and inflation fears weighed on the equity markets on Thursday. In economic news, initial jobless claims for the week ended June 2 fell to 309,000, below the expected 312,000. In corporate news, Martek Biosciences (MATK) rose after the company issued better-than-expected fiscal second quarter earnings. Wal-Mart (WMT) fell after posting weaker-than-expected same-store says in May. The DJIA lost 1.48% and the NASDAQ dropped 1.77%.

Following three consecutive negative days, the equity markets rebounded on Friday. In economic news, the April Trade Balance narrowed to a deficit of $58.5 billion, down 6.2%. In corporate news, McDonalds (MCD) rose after announcing better-than-expected May same-store sales. National Semiconductor (NSM) also rose after announcing fiscal fourth quarter earnings above expectations. For the day, the DJIA gained 1.19% and the NASDAQ gained 1.27%.

Pressured by inflation concerns and rising Treasury yields, the equity markets finished the week in negative territory. The markets were able shrug off a significant drop in the Shanghai Composite index, which plunged 8.3%, its biggest one-day decline since the 8.8% drubbing in late February that caused widespread panic. But stocks fell from record levels as strength in the services sector and comments from Bernanke about housing and the economy dashed investors' hopes for a reduction in interest rates any time soon. For the week: The Dow, NASDAQ, and S&P 500 lost 1.78%, 1.54%, and 1.87% respectively.