Today we saw another market gain, but several key stocks gave back some recent gains. The oil inventories report as well as reports Hurricane Dolly only took down a max of 8% of Gulf of Mexico and nearby production, helped lower oil prices over $3.00 to under $125.00 per barrel. Today was rather light on the economic front so the market was led higher mostly thanks to earnings from DJIA components. Longer-term rates rose on Fed comments today calling for rates to rise sooner rather than later, although that was independent and slightly different than the actual Beige Book comments.

Here are today's unofficial closing bell levels:

DJIA 11632.70 (+30.30)
S&P500 1282.05 (+5.05)
NASDAQ 2325.88 (+21.92))
10YR T-Note 4.148 (+0.05%)
TOP ANALYST UPGRADES
TOP ANALYST DOWNGRADES
52-WEEK LOWS

AT&T Inc. (NYSE: T) was the winner of DJIA components after reporting earnings this morning, particularly since it has lost nearly one-third of its value. Shares were up 4% at $33.11 in today's final minutes.

Apple Inc. (NASDAQ: AAPL) says it sold one million 3G iPhones in its first three days on the market. Some analysts believe that company could sell 20 million of them in the next year.

One of the reasons some people waited for the new 3G version of the phone is that it runs on AT&T's (NYSE: T) faster wireless broadband network. The older version, which ran on the 2.5G network, could be very slow linking to the internet.

Now that over a million people have their faster phones, they may find that there are a lot of places they won't work. AT&T's 3G network is concentrated in large cities. Even in those urban areas and their suburbs, there are a lot of dead spots. At least a couple of those are within a short drive from the Apple and AT&T headquarters.

For people taking their iPhones to Las Vegas, the coverage is extremely good. Anyone taking a vacation to Vermont, New Hampshire, Wyoming, or Montana is out of luck. (For a more complete list of places the new 3G iPhone won't work, visit 247wallst.com.)

Douglas A. McIntyre is an editor at 247wallst.com.

Stock futures were higher this morning, indicating stocks could have a positive start to the session as oil prices continued to decline, sinking below $127 a barrel. Weekly inventories numbers reported later today could have an impact on oil prices. Then there is continued optimism in the financial sector, which caused the rally Tuesday. Also, a bill aimed at helping the housing market will reach the House floor. But once again earnings will likely have investors' attention with Costco already giving a profit warning.

Costco Wholesale Corp. (NASDAQ: COST) shares are plunging over 8% in premarket trading after the wholesale retailer warned its August-ending quarter's profit would miss analyst estimates. This is most surprising as Costco had been one of the retailer that seemed to have benefited from consumers trying to save and buy lower-cost items. But Costco blamed the lower profit on rising energy costs, saying it will earn less than $1 per share.

AT&T (NYSE: T) closed at $31.83 Monday. T is scheduled to report Q2 EPS on July 23. T August option implied volatility of 36 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.

Verizon (NYSE: VZ) is scheduled to report Q2 EPS on July 28. VZ announced second quarter wireless net customer additions of 1.5 million. At the end of the quarter VZ had 68.7 million customers. VZ August option implied volatility of 31 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: Wachovia, American International Group and BT Group were today's noteworthy downgrades:

• Oppenheimer downgraded shares of Wachovia (NYSE: WB) to Underperform from Perform as they believe the outlook is "bleak" for equity shareholders. The firm thinks Wachovia's expenses can't come down fast enough too offset earnings erosion.
  
• Wachovia downgraded shares of American International Group (NYSE: AIG) to Market Perform from Outperform as they believe AIG's CDO valuations worsened in Q2, which could result in a $2B-$7B after tax "valuation adjustment." Wachovia expects the value of AIG's core insurance franchise to be obscured by its credit exposure.
  
• Collins Stewart cut BT Group (NYSE: BT) to Hold from Buy on concerns surrounding the company's fiber network expansion.

OTHER DOWNGRADES:

• Nokia (NYSE: NOK) was downgraded to Add from Buy at WestLB; the firm also lowered Ericsson (NASDAQ: ERIC) to Hold from Buy and Alcatel-Lucent (NYSE: ALU) to Sell from Hold.
  
• Third Wave (NASDAQ: TWTI) was cut to Hold from Buy at Deutsche Bank.
  
• AT&T (NYSE: T) was removed from Goldman's Conviction Buy List.

Wachovia downgraded AIG (NYSE:AIG) to "market perform" from "outperform", according to Briefing.com. The news service also reports that Oppenheiner downgraded Wachovia (NYSE:WB) to "under-perform" from "market perform".

AT&T (NYSE:T) maintained Buy but Removed from Conviction Buy List at Goldman Sachs according to 247wallst.com. The financial website also reports that Motorola (NYSE:MOT) Started as Sell at Societe Generale

Douglas A. McIntyre

The new Apple Inc. (NASDAQ: AAPL) iPhone is even a bigger hit than analysts had expected. During its debut weekend, about a million units of the phone that can do everything but your taxes were sold. This number is already higher than earlier estimates from today Doug McIntyre has posted. Even Apple's prickly Chief Executive Steve Jobs was impressed.

"iPhone 3G had a stunning opening weekend," he said in a press release issued this morning. " It took 74 days to sell the first one million original iPhones, so the new iPhone 3G is clearly off to a great start around the world."

Indeed, diehard geeks camped out and around Apple and AT&T Inc. (NYSE: T) stores to be among the first to get their hands on the sleek new phone. A 22-year-old college student from New Zealand named Jonny Gladwell was the first to purchase the mother of all gadgets. He waited outside his Vodafone store for 60 hours, according to Vnunet.com. His parents must be proud (or horrified).

What makes this even more amazing is that many Apple fans are fuming over technical glitches and shortages of the phone their lives will not be complete without. Gizmodo dubbed this the iPocalypse. Mitch Wagner of Information Week argues that Apple has got some fence-mending to do with customers who clearly expected better.

After having monitored blogs and news of the iPhone 3G launch all morning and afternoon, the general feeling I get is that the launch of the iPhone 3G could be considered nothing less than a disaster. Blame Apple Inc. (NASDAQ: AAPL), blame AT&T Inc. (NYSE: T) -- but if you were brave enough to "have to have" an iPhone 3G on launch day, you may have a need for a stress ball by now.

It appears that Apple's integration with AT&T's activation system didn't fare so well on this day. Both companies should have known, like June of last year, that it would be a super-busy day for the iPhone universe. In what seems like a commonplace event on large product launches, activation servers crashed, software updates failed (even for the older iPhone owners who wanted to updated to the newer software) and scores of customers were left without working iPhones as the in-store activation process was completely fubar'ed by both companies.

For Apple to have such an awesome piece of hardware and software in the iPhone 3G, working with an aging and piecemeal telecom carrier was unfortunately a necessity. After all, Apple does not own a national wireless network with high-speed data capability. But the customer process failed miserably today -- something that zealous and exuberant iPhone 3G buyers should not forget. Did you really, really need that iPhone 3G today? If your answer is yes (yeah, right), you should have expected a nightmare. For many of you, that was delivered rather nicely. Hope you kept up with your pulse, eh?

Before the bell: Futures higher on SBUX, YHOO, ahead of inventory report

Deutsche Bank (NYSE: DB) shares are trading 4.2% higher in premarket action after the bank, seeking to calm investors, said it expects a profit in its second quarter.

While AT&T Inc. (NYSE: T) unveiled its pricing strategy for Apple Inc. (NASDAQ: AAPL)'s 3G iPhone to go on sale July 11 with a $199 and $299 (with contract) price points as expected, Canadians are outraged over Rogers Communications Inc. (NYSE: RCI)'s 3G iPhone rates and have created an online petition that collected over 19,000 signatures already.

AstraZeneca (NYSE: AZN) rose in Europe and is rising over 2.7% in premarket trading after winning a court case against Teva Pharmaceutical (NASDAQ: TEVA) and the Sandoz unit of Novartis (NYSE: NVS) over patents on its Seroquel schizophrenia drug.

A day after car sales were seen as "not as bad as expected," comes Merrill Lynch and downgrades General Motors (NYSE: GM). Shares are down over 3% in premarket trading.

TheStreet.com's Jim Cramer says this is a crucial moment for the dividend-payers, which should be getting support here.

You can't even find protection in yields these days. It just went away. Perhaps we will get it if Sen. Obama gets elected. Perhaps with higher rates. Perhaps with the downfall of the high-yielding American financials. (Nice discussion of the lack of dividend safety courtesy of the man who knows more about dividends than anyone, Dave Peltier, in the Columnist Conversation last week.)

For ages, it seemed you could get to a magic number, typically 4% yield, where stocks would bounce, or at least be given a parachute that opened for a gentle landing.

Last week that parachute failed. You have stocks like Con Ed (NYSE: ED) (Cramer's Take) just getting trashed here, pushing the yield to 6%. You have stocks like Weyerhauser (NYSE: WY) (Cramer's Take), Carnival Cruise (NYSE: CCL) (Cramer's Take), Gannett (NYSE: GCI) (Cramer's Take), just slicing through the protection. The former's got cyclicality, the middle's got consumer and fuel worries, and the latter is in secular. But they all have no trouble paying the dividend.

Or consider Verizon (NYSE: VZ) (Cramer's Take) and AT&T (NYSE: T) (Cramer's Take). The first is at a 5% yield, the other is almost there. No one questions their ability to support that dividend.

Verizon (NYSE: VZ) is making a fairly concerted effort to get Vodafone (NYSE: VOD) out of its equity position in Verizon Wireless. The question is, why would Vodafone get out? Verizon Wireless makes a lot of money.

According to the FT, the head of Verizon, Ivan Seidenberg said, "Would I like to have 100 per cent of the earnings given we're doing 100 per cent of the work? Yeah, I would."

Verizon Wireless does not pay dividends to Vodafone, so it does not get much of a cash benefit from its piece of the pie, but the FT points out that the British company's stake is worth about $60 billion.

Reflecting on the debate, it would probably be in the best interests of Vodafone shareholders to sell out to Verizon. Their benefits of ownership are limited. Vodafone could use the cash for expansion in Europe, Asia, and the Middle East.

Perhaps the greatest reason for Vodafone to make a graceful exit is the US market itself. Growth of wireless subscribers is slowing as the market reaches a point of saturation. Competition is tough, especially with AT&T (NYSE: T) having about the same number of subscribers as Verizon Wireless. A price war could take down margins at both companies.

Vodafone's stake may never be worth more than it is now.

Douglas A. McIntyre is an editor at 247wallst.com.

AT&T (NYSE: T) shares are trading higher today after an analyst at Bernstein upgraded the stock to "Outperform" from "Market Perform" citing the stocks current valuation. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on T.

After hitting a one-year high of $42.97 in September, the stock hit a one-year low of $32.95 in February. T opened this morning at $34.89. So far today the stock has hit a low of $34.87 and a high of $35.25. As of 12:30, T is trading at $35.10, up $0.83 (2.4%). The chart for T looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $27.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in four months as long as T is above $27.50 at October expiration. AT&T would have to fall by more than 21% before we would start to lose money. Learn more about this type of trade here.

J.P. Morgan upgraded Tibco Software (NASDAQ:TIBX) from "neutral" to "overweight", according to MarketWatch.

Sandler O'Neill & Partners cut its earnings targets on Discover Financial (NYSE:DFS) ahead of earnings, according to the AP.

Boeing (NYSE:BA) was cut to "sell" from "neutral" at Goldman Sachs, according to the AP. Briefing.com also reports that AT&T (NYSE:T) was raised to "outperform" at Bernstein

During the challenging market conditions over the past year, the telecom sector has felt its fair share of the pain. BusinessWeek brings Standard & Poor's Todd Rosenbluth who suggests that some of these telecommunication stocks could now be good investments for traders as they have a safe dividend.

Despite worries tied to the slowing U.S. economy and increased competition, "we think that some of the concerns are overdone and believe selective stocks are attractively valued," Rosenbluth stated. Rosenbluth also noted that telecom stocks have started showing signs of recovery for the past few weeks, helped by the launch of new handsets and merger and acquisition agreements.

Some of investors' favorite companies are AT&T Co. (NYSE: T) and Citizens Communications Co. (NYSE: CZN). Rosenbluth believes that the launch of Apple (NASDAQ: AAPL)'s new iPhone, 3G iPhone, will stir increased demand for smartphones, helping such companies, while putting pricing pressure on some of their competitors.