U.S. stocks rise as investors hope there'll be a new bailout bill

— -- Stocks recovered slightly Tuesday, a day after markets suffered a historic blow following Congress' rejection of a plan to mend the financial sector.

In afternoon trading, the Dow Jones industrial average rose more than 300 points. The gain helped to repair some of the Dow's 778-point decline Monday that punished many areas of the stock market ranging from financials to technology stocks.

Investors are hopeful Congress will resume talks and craft a bill to help smooth out the financial system's problems resulting from bad mortgage loans and falling home prices, says Michael Holland of Holland & Co. "The market is betting Congress will come through with something for Friday," he says.

Technology stocks rose, too, helping to ease some of the pain from Monday's painful decline. And boosted by a nearly 50% gain by the thrifts & mortgage finance companies in the index, the Standard & Poor's 500 gained.

Meanwhile, some of the sheer panic in the bond market eased slightly, although conditions are still strained. Investors sold the three-month Treasury bill, a favorite investment among the most jittery investors, to push the yield to 0.67% from 0.14% late Monday.

Another sign of investors' concern with the bond market eased a bit. The Credit Derivatives Research's CDR Investment Grade Index, a measure of how nervous investors are with the financial health of the highest-rated U.S. companies, fell 3.3% as investors recovered from Monday's panic.

Still, lenders remain very stingy and extremely cautious. The TED spread, a measure of how much banks must pay to borrow, hit 3.4 percentage points, up from 1.1 percentage points a month ago, Bloomberg News says. Monday, the spread hit 3.54 percentage points, the highest since at least 1984. And the LIBOR, a widely watched interest rate that influences rates paid by banks, businesses and consumers, rose 4.31 percentage points to an all-time high of 6.88%, according to the British Bankers' Association, which sets the rate every Monday London time.