Optimism Wins the Day as Investors Anticipate Stimulus, Auto Bailout

Wall Street surged yesterday, boosted by plans for an economic stimulus and progress in Congress on a bailout of the auto industry.

The Dow Jones industrial average climbed 3.46 percent, or 298.76 to 8934.18, briefly trading above 9,000 for the first time in a month. The Standard & Poor's 500-stock index rose 3.84 percent, or 33.63, to 909.70, while the tech-heavy Nasdaq composite index was up 4.14 percent, or 62.43, to 1571.74.

After falling to a multiyear low last week, crude oil prices also bounced back, climbing 7 percent, to $43.71 a barrel, on the New York Mercantile Exchange. That helped lift the energy sector, including ConocoPhillips, which gained more than 6 percent, to $50.85 a share.

Yesterday's rally was the latest sign that some investors are making the risky bet that stocks have already hit their lowest point after months of market turbulence and are poised to begin recovering, analysts said.

"Everyone wants the worst to be behind us," said Jeffrey Pritchard, broker and analyst for Altavest Worldwide Trading. Stocks rallied last week even after government data showed that U.S. employers shed 500,000 jobs last month, he said. "People are trying to see [bad news] in the most positive light possible," Pritchard said.

Among the leading stocks were General Motors, up 21 percent, to $4.93, and Ford, up 24 percent, to $3.38. Congress neared a deal yesterday on a $15 billion bailout of the auto industry.

A plan unveiled last weekend by President-elect Barack Obama to create the largest public works program in decades helped rally commodity and industrial stocks. Alcoa, an aluminum maker, rose 18 percent, to $9.58, and U.S. Steel surged 24.4 percent, to $35.79. Caterpillar gained 11 percent, to $42.42. The hard-hit sector was already buoyed by U.S. Steel's announcement last week that it would cut production and hope that an auto bailout would help sustain demand, said Bill Selesky, a senior analyst at Argus Research. Now, Obama's economic stimulus package could provide some long-term relief, said Selesky.

"When you're talking about roads and bridges, those are mostly steel-driven," he said. Investors mainly shrugged off more reports of layoffs. 3M announced yesterday that it would shed 1,800 jobs and order some workers to take vacation or unpaid time off for the last two weeks of the year. Dow Chemical is slashing 5,000 full-time jobs, or about 11 percent of its workforce.