Stocks jump as investors shrug off job losses, focus on stimulus plan

NEW YORK -- Investors have taken another big gamble on the government's plans to help the economy — hoping that this one will finally work.

All the major indexes rose more than 2% Friday, including the Dow Jones industrial average, which rose more than 200 points as Wall Street looked past another bleak jobs report and awaited word from Washington about an economic stimulus plan and changes to the government's financial rescue program.

The advance helped propel the indexes to their first winning week after four straight weeks of losses, and put the Nasdaq composite in positive territory for the year to date.

The Senate was expected to vote on its version of an economic stimulus plan that would include a mix of spending and tax cuts. The Senate bill would cost $937 billion; the House already passed a similar version.

Financial stocks led the market as investors also awaited the government's latest revisions to its lifeline for banks. Treasury Secretary Timothy Geithner and other top officials are close to finishing a plan to overhaul the government's $700 billion financial rescue fund. Geithner is expected to announce the changes in a speech on Monday.

Some investors were worried that the changes would involve nationalizing many banks and, in the process, wiping out shareholders. Many investors are hoping the plan will relax rules requiring businesses to assign a value to all of their assets each quarter. Advocates say altering the rule even temporarily could make it easier for banks to lend without worrying about depleting their cash reserves and running afoul of accounting standards.

Investors waiting for word on the government's plans were unfazed by a terrible employment reading. The Labor Department said U.S. employers slashed 598,000 jobs in January, the most since late 1974. The unemployment rate rose to 7.6%, the highest since late 1992.

"All focus right now is now is really on Washington," said Dan Cook, senior market analyst at IG Markets in Chicago. He said investors are hoping the unemployment report was bad enough to goad lawmakers into swift action on the stimulus plan.