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Stimulus plan helps boost stocks


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POSTED: Thursday, February 12, 2009

NEW YORK » Investors shuttled between optimism and pessimism yesterday, finally betting that the government might help the economy out of recession after all.

News in late afternoon that key lawmakers agreed on a $789 billion economic stimulus plan sent stocks moderately higher in a partial rebound from a plunge Tuesday that took the Dow Jones industrials down 380 points.

Yesterday, the uncertainty continued. Investors snapped up heavily beaten-down bank stocks as chief executives of the nation's top banks appeared before a House committee to answer questions about how they have put to use more than $160 billion in taxpayer money to date.

But a sustained turn higher didn't come until key members of the Senate announced a deal on the stimulus bill and said President Barack Obama could sign it soon. The measure includes provisions for unemployment benefits, food stamps, health coverage and more. It also includes billions for states facing yawning budget gaps.

The Dow Jones industrial average rose 50.65, or 0.64 percent, to 7,939.53.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 6.58, or 0.80 percent, to 833.74, and the Nasdaq composite index rose 5.77, or 0.38 percent, to 1,530.50.

The Russell 2000 index of smaller companies rose 2.18, or 0.49 percent, to 447.95.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a light 1.36 billion shares.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.82 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.31 percent from 0.30 percent late Tuesday.

Light, sweet crude fell $1.99 to settle at $35.94 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies. Gold prices rose again yesterday, bringing their two-day gain to nearly 6 percent.