NEW YORK (AP) -- Investors have taken another big gamble on the government's plans to help the economy -- hoping that this one will finally work.
All the major indexes rose more than 2 percent Friday, including the Dow Jones industrial average, which rose more than 200 points as Wall Street looked past another bleak jobs report and awaited word from Washington about an economic stimulus plan and changes to the government's financial rescue program. The advance helped propel the indexes to their first winning week after four straight weeks of losses, and put the Nasdaq composite in positive territory for the year to date.
The Senate was expected to vote on its version of a stimulus plan that would include a mix of spending and tax cuts. The Senate bill would cost $937 billion; the House already passed a similar version.
Financial stocks led the market as investors also awaited the government's latest revisions to its lifeline for banks. Treasury Secretary Timothy Geithner and other top officials are close to finishing a plan to overhaul the government's $700 billion financial rescue fund. Geithner is expected to announce the changes in a speech on Monday.
Some investors were worried that the changes would involve nationalizing many banks and, in the process, wiping out shareholders. Many investors are hoping the plan will relax rules requiring businesses to assign a value to all of their assets each quarter. Advocates say altering the rule even temporarily could make it easier for banks to lend without worrying about depleting their cash reserves and running afoul of accounting standards.
Investors waiting for word on the government's plans were unfazed by a terrible employment reading. The Labor Department said U.S. employers slashed 598,000 jobs in January, the most since late 1974. The unemployment rate rose to 7.6 percent, the highest since late 1992.
"All focus right now is now is really on Washington," said Dan Cook, senior market analyst at IG Markets in Chicago. He said investors are hoping the unemployment report was bad enough to goad lawmakers into swift action on the stimulus plan.
Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said investors now are wondering "will government stimulus stop this virus that's spreading throughout the country?"
Cook said investors are eager for the stimulus plan to pass even if it takes time to work its way into the economy, as many economists predict.
"We just want to see a plan and have a direction," he said. "We can adjust from there and make moves on the fly."
But analysts caution that the plan won't repair the economy's problems overnight.
"As the realization sets in that this is going to take some time to work its way into the system confidence could wane a bit," said Matt King, chief investment officer for Bell Investment Advisors, in Oakland, Calif. In that case, the market would be following its pattern in recent months as other government steps were unveiled -- early euphoria dissipated as the reality of a troubled economy set in.
The Dow industrials rose 217.52, or 2.70 percent, to 8,280.59 after rising 106 on Thursday.
Broader stock indicators also jumped. The Standard & Poor's 500 index rose 22.75, or 2.69 percent, to 868.60, and the Nasdaq composite index rose 45.47, or 2.94 percent, to 1,591.71.
The day's gains have left the Nasdaq higher for the year; investors have been turning to the index's tech stocks on the belief they will help lead the market higher. The Nasdaq ended the week with a huge 7.81 percent gain, while the Dow was up 3.5 percent and the S&P 500 rose 5.17 percent.
The Russell 2000 index of smaller companies rose 15.62, or 3.43 percent, to 470.70. It rose 6.13 percent for the week.
Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where consolidated volume came to 6.38 billion shares compared with 6.51 billion shares traded Thursday.
On Thursday, the major indexes soared more than 1 percent as Wall Street shrugged off troubling economic reports and searched for bargains among battered retail and technology stocks.
Bond prices were mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.99 percent from 2.92 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.27 percent from 0.26 percent.
The dollar was mostly higher against other major currencies. Gold prices edged higher.
Light, sweet crude fell $1 to $40.17 a barrel on the New York Mercantile Exchange.
Friday's rally reflects fear among some investors that they will miss out on a jump in stocks if the government comes up with the right mix of medicine for the economy, King said. Some of the buying was also likely the result of short covering -- investors who borrowed stock and sold it on expections the market would fall had to buy stock to repay the loans.
Many of the Friday's steepest gains occurred in hard-hit parts of the market like financials and retailers.
Financial stocks rose. Bank of America Corp. jumped $1.29, or 26.7 percent, to $6.13, while JPMorgan Chase & Co. rose $3.09, or 12.6 percent, to $27.63. Smaller banks also rose. Fifth Third Bancorp rose 99 cents, or 60.4 percent, to $2.63. State Street Corp. advanced $2.95, or 10.7 percent, to $30.49.
Among retailers, Macy's Inc. advanced 95 cents, or 10.9 percent, to $9.70.
Overseas, Britain's FTSE 100 rose 1.49 percent, Germany's DAX index rose 2.97 percent, and France's CAC-40 rose 1.84 percent. Japan's Nikkei stock average rose 1.60 percent.
The Dow Jones industrial average closed the week up 279.73, or 3.50 percent, at 8,280.59. The Standard & Poor's 500 index rose 42.72, or 5.17 percent, to 868.60. The Nasdaq composite index rose 115.29, or 7.81 percent, closing at 1,591.71.
The Russell 2000 index, which tracks the performance of small company stocks, rose 27.17, or 6.13 percent, to 470.70.
The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 8,785.09, up 449.45 points, or 5.39 percent, for the week. A year ago, the index was at 13,418.18.