NEW YORK » The government's plan to bail out Citigroup sent Wall Street soaring yesterday for the second straight session as investors hoped the worst of the financial industry's problems might finally be over. The Dow Jones industrials surged nearly 400 points, and all the major indexes jumped more than 4.5 percent.

The rally gave the market its first two-day advance in three weeks and the Dow its biggest two-day percentage gain since October 1987, the month of the Black Monday crash.

Wall Street's enthusiasm grew not only because the bailout answered questions about Citigroup but also because many observers saw the move as offering a model for how the government might stabilize other banks.

Besides its $700 billion bailout plan for the financial industry, the government has bailed out insurance giant American International Group Inc. and taken over lenders Fannie Mae and Freddie Mac.

The Dow rose 396.97, or 4.93 percent, to 8,443.39. Its last two-day advance was Oct. 30 and 31, along with the rest of the market.

Broader stock indicators also jumped. The Standard & Poor's 500 index advanced 51.78, or 6.47 percent, to 851.81, and the Nasdaq composite index rose 87.67, or 6.33 percent, to 1,472.02.

The Russell 2000 index of smaller companies rose 30.25, or 7.44 percent, to 436.79.

Over the course of Friday and yesterday, the Dow rose 11.8 percent, while the broader S&P 500 index jumped 13.2 percent. The Nasdaq rose 11.9 percent. Paper gains in U.S. stocks over the two sessions came to $1.2 trillion, according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stocks traded in America.

Bond prices were mixed yesterday as investors examined the government's bailout plan for Citigroup. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.33 percent from 3.20 percent late Friday.

The Treasury bill market showed continuing high demand, a sign of investors' caution. The yield on the three- month T-bill, considered one of the safest investments, fell to 0.01 percent from 0.04 percent late Friday.

The dollar was mostly lower against other major currencies, while gold prices rose.

Light, sweet crude rose $4.61 to $54.54 on the New York Mercantile Exchange.

Wall Street shrugged off a larger-than-expected drop in sales of existing homes last month as investors instead focus on the government's plans for the financial sector.

The financial sector led yesterday's advance, fueled by a sense that the government might be developing a more nuanced yet ready-to-apply remedy for financial firms. Citi surged $2.18, or 58 percent, to $5.95. Bank of America rose $3.12, or 27 percent, to $14.59. JPMorgan Chase & Co. rose $4.86, or 21 percent, to $27.58.

Advancing issues outnumbered decliners by about 7 to 1 on the New York Stock Exchange, where volume came to 7.65 billion shares, compared with 9.27 billion on Friday.