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The Week:  Reform, Rally, Rebuke...and Joblessness

The first quarter stumbled to a close, the second quarter began with the eighth-biggest daily

CNBC.com

point gain ever for the Dow Jones Industrials -- and that was just part of a busy week for stocks, traders, analysts and investors.

Sin and Repentance

The week began with Treasury Secretary Hank Paulson outlining plans for a sweeping reform of the nation's financial regulatory systems. Among other things, the plans call for the Federal Reserve to play a larger role.

Click the video to Watch the Weekly Wrap.

"The Federal Reserve is a natural choice for the important task of market stability regulation," Paulson said.

In an interview with outspoken Fed critic (and CNBC host) Jim Cramer, Greg Valliere of Stanford Financial Group assailed the decision to give the Fed an expanded role.

"They missed the subprime crisis in August!" he exclaimed. "They were the regulators who were supposed to stop all this predatory lending. This is like putting Eliot Spitzer in charge of the morals division."

On Monday afternoon, in the final hours of a disappointing quarter, talk on CNBC turned to "sin stocks," shares of gambling, alcohol, tobacco and firearms companies that have proven to be resilient in recessionary times.

Tom Anderson of Kiplinger Personal Finance pointed to the spin-off of Philip Morris International by Altria Group as the basis for some stock buying. On CNBC, he was asked which stock he would recommend.

"We like both!" he answered. "Philip Morris International obviously is going to be the fast grower. Altria will be able to cut costs, and is more of a dividend play."

Q2: A Rally Big Show

The second quarter opened Tuesday morning with a powerful rally, sending the Dow up nearly 400 points by the end of trading. Traders went looking for stocks that hadn't been caught up in the surge, and Kevin Landis of the Firsthand eCommerce Fund found a couple in the field of alternative energy, Applied Materials and the less well-known Echelon, which he described as an "energy information company."

"The form of alternative energy that pencils out best right now is efficiency, and, before you can work on efficiency, you need to know what the heck is going on, and that's what Echelon's products do for you," he told CNBC.

Scrutiny On the Hill

On Wednesday and Thursday, Congressional committees questioned top regulators and bankers, including Fed Chairman Ben Bernanke, New York Fed President Timothy Geithner, and the top executives of Bear Stearns and JPMorgan Chase, Alan Schwartz and Jamie Dimon.

Tuesday's rally faded into sideways trading, and the experts went back to recommending stocks for long-term investors. Vince Farrell of Scotsman Capital singled out IBM, Honeywell, and the parent company of CNBC.com, General Electric.

"I think that's what you buy now, and I think you have to recognize that you might buy a little bit more tomorrow cheaper, but you'll be very glad a year or two from now that you did that," he said.

For Whom the Bell Tolls

And there were memories of the previous week's most durable remark.

"They don't ring the bell at the bottom, but I think I hear a bell ringing," Black Rock's Bob Doll

had said.

This week, Doll was encouraged by the market's resilience in the face of a sharp increase in weekly claims for unemployment benefits, and the Labor Department's dismal March jobs report that showed the jobless rate rising to 5.1 percent.

"It doesn't mean we're going straight up," he cautioned. "We still have a struggling economy; we still have credit problems, but I believe we've turned the corner."

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