NEW YORK » The stock market showed renewed confidence yesterday, extending its rally and lifting the Dow Jones industrials to their highest level in a month following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy.

The Dow advanced nearly 300 points, gaining 560 points in the last two sessions to extend a period of relative tranquility on Wall Street. The Dow and the Standard & Poor's 500 have risen in nine out of 11 sessions with investors absorbing bad economic news without signs of the panic that rocked the market for much of the fall.

The Dow rose 298.76, or 3.46 percent, to 8,934.18, its highest close since it finished at 8,943.81 on Nov. 7. The blue-chip index, which added 259 points on Friday, is now up for December.

Broader indexes also rose. The Standard & Poor's 500 index advanced 33.63, or 3.84 percent, to 909.70; and the Nasdaq composite index jumped 62.43, or 4.14 percent, to 1,571.74.

The Russell 2000 index of smaller stocks rose 20.29, or 4.40 percent, to 481.38.

Obama's plan calls for the largest U.S. public works program since the creation of the interstate highway system a half-century ago. That could bolster the economy by putting thousands of people to work building schools and other construction projects.

His weekend announcement lifted a range of companies, from machinery makers to materials producers. Alcoa Inc., the world's third-largest aluminum producer, surged 18 percent on the news; while heavy-equipment maker Caterpillar Inc. jumped 11 percent.

The White House said yesterday that it was “;very likely”; to strike an agreement with Congress on funneling money to General Motors Corp., Chrysler LLC and Ford Motor Co. The package is expected to total about $15 billion.

GM rose 85 cents, or 21 percent, to $4.93, while Ford rose 66 cents, or 24.2 percent, to $3.38. Chrysler isn't publicly traded.

Bond prices fell as investors put money back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.74 percent from 2.70 percent late Friday.

The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.01 percent, still indicating a high degree of investor uneasiness.

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

Dow Chemical Co. said yesterday it will slash 5,000 full-time jobs - about 11 percent of its total work force - close 20 plants and sell several businesses to rein in costs amid the economic recession.

Light, sweet crude rose $2.90 to settle at $43.71 a barrel on the New York Mercantile Exchange.

Stocks that rose outpaced those that fell by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 6.42 billion shares compared with 6.03 billion shares traded Friday.