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Dow Rallies as Oil Tops $71, Madoff Gets Max

Monday, 29 Jun 2009 | 5:21 PM ET

Stocks rallied Monday as convicted Ponzi swindler Bernie Madoff received the maximum sentence and oil topped $71 a barrel.

The Dow Jones Industrial Average rose 90.99, or 1.1 percent, to close at 8,529.38, while the S&P 500 gained 0.9 percent and the Nasdaq added 0.3 percent.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, dropped again, finishing at 25.35.

Traders said relief that Madoff had the book thrown at him was probably behind today's rally.

Saying symbolism is important in a case of this magnitude, a judge sentenced Madoff to 150 years in prison, the maximum sought by prosecutors.

"Here the message must be sent that Mr. Madoff's crimes were extraordinarily evil and that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll," U.S. District Judge Denny Chin said.

>> Tips for Surviving Prison: Bernie Madoff Edition

Investors were encouraged by economic data out of London, which showed the euro zone's economic-sentiment index rose for a third straight month, and from China, where stocks closed at a one-year high for the fourth straight session amid glimmers of recovery.

No major U.S. economic indicators were released today but later this week, investors will get readings on manufacturing, pending-home sales and unemployment.

Plus, there was some window dressing — selling off your losers and picking up some winners — as Tuesday marks the end of the quarter.

ExxonMobil and Chevron gained more than 1 percent as crude gained more than $2, settling at $71.52 a barrel.

There was only one decliner on the Dow — Alcoa , which lost 3 percent after Friedman Billings Ramsey downgraded its rating on the stock to "underperform."

Plus, brace yourself, it's that time again — Alcoa unofficially kicks off the second-quarter earnings season with its results next week.

Hewlett-Packard , Bank of America and Merck were the biggest percentage gainers on the Dow — all three gained more than 3 percent.

Homebuilders got a boost after Credit Suisse raised its rating on KB Home to "neutral" from "underperform," citing stronger orders for the second quarter and attractive valuation.

Drug stocks started the day lower but ended mixed.

Sanofi Aventis rose after a Financial Times report that the Paris-based pharmaceutical was preparing to make acquisitions to strengthen its position in the industry.

American depositary shares of UBS rose after the Swiss bank said it will pay between $2.77 billion and $4.62 billion to settle a US tax probe.

State Street shares slipped after the bank received a "Wells Notice" from the Securities and Exchange Commission regarding a probe into various investment moves in 2007 and in prior periods. State Street said it is cooperating with the inquiry.

Tech stocks lagged the broader market, in a reversal of the trend of recent weeks.

Apple skidded as CEO Steve Jobs officially returned to workafter a six-month health leave in which he had a liver transplant.

Palm shares also retreated, after a sharp run-up last week as the company posted a narrower-than-expected loss amid strong demand for its new Palm Pre.

Microsoft rose after Deutsche Bank raised its price target on the stock to $30 from $22.

Fast-food giant Wendy'ssaw its shares pop after Barron's wrote that the company could be significantly undervalued and poised for a sharp move higher.

Viacom shares rose after "Transformers" proved to be a summer blockbuster for the media giant, raking in $201.2 millionin the five days since it hit theaters Wednesday. Hasbro, which has the licensing rights to "Transformer" products, saw its shares decline. One analyst projected the movie tie-in products could contribute $550 millionto Hasbro's sales this year.

Volume was low at the start of this holiday-shortened week, with about 1.1 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 2 to 1.

This Week:

MONDAY: Earnings from H&R Block after the bell
TUESDAY: Case-Shiller home-price index; leading indicators; Conf. Board consumer confidence; Fed's Bullard, Hoenig and Yellen speak
WEDNESDAY: Weekly mortgage applications; ISM manufacturing index; construction spending; pending-home sales; weekly crude inventories; Fed's Evans speaks
THURSDAY: Weekly jobless claims; May jobs report; factory orders
FRIDAY: All U.S. financial markets closed for the Independence Day holiday

Send comments to cindy.perman@nbcuni.com.

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