NEW YORK » Wall Street pulled off a big turnaround yesterday, rebounding from a steep early drop to finish modestly higher. Investors who began the day worrying about a revival of the banking crisis grew optimistic during the session that the government will again help the financial industry.

The selloff, which followed news that Bank of America Corp. needs another government cash infusion, had the Dow Jones industrials heading for a seventh straight loss. But investors awaiting a Senate vote authorizing the second $350 billion from the government's financial bailout fund became more upbeat as the day wore on. They were hoping additional money from Washington will help stabilize banks; lawmakers approved the money after the market closed.

Wall Street is nervous that the money already given to banks during the fall has done little to repair their balance sheets.

The Dow rose 12.35, or 0.15 percent, to 8,212.49 after falling the past six days. The Dow was down as much as 205 during the session and briefly slipped below the 8,000 mark. That was the first move below that psychological benchmark since Nov. 21, a day after the blue chips closed at their lowest level in more than five years.

Broader stock indicators advanced yesterday. The Standard & Poor's 500 index rose 1.12, or 0.13 percent, to 843.74 and the technology-heavy Nasdaq composite index rose 22.20, or 1.49 percent, to 1,511.84.

The Russell 2000 index of smaller companies rose 9.45, or 2.09 percent, to 462.62.

The Dow's bounce off the 8,000 level was a welcome move by traders hoping stocks can remain above their November lows. At their weakest point yesterday, the Dow and S&P 500 index were down more than 11 percent in seven sessions.

The number of stocks rising on the New York Stock Exchange outpaced those declining by about 8 to 7. Earlier decliners led gains gainers by 10-to-1. Consolidated volume came to 6.84 billion shares, compared with 5.3 billion shares traded Wednesday.

Bonds made modest moves as stocks recovered. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 2.20 percent from late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.10 percent from late Wednesday.

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

Light, sweet crude fell $1.88 to settle at $35.40 a barrel on the New York Mercantile Exchange.