Stocks jump before House vote

Wall Street starts the day on a positive note on bailout hopes after government's dismal employment report.

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By Aaron Smith and David Goldman, staff writers

NEW YORK ( -- Stocks jumped at the open Friday, as investors looked past a very weak monthly employment report and focused on the House revote on the Wall Street bailout bill.

The Dow Jones industrial average (INDU), the Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all gained in the early going.

Investors also welcomed Wachovia's surprise deal with Wells Fargo, ahead of the House's second vote on a $700 billion bank bailout package.

The House shot down a similar bill earlier in the week, but the Senate passed a tweaked version Wednesday, with sweeteners added to please the House. Investors expect the bill to pass, especially after the job market took another big hit Friday.

Jobs: The U.S. Department of Labor announced Friday that the economy had shed 159,000 jobs in September. That's more than the 105,000 economists were expecting, and it was the largest drop since 2003. The unemployment rate held steady at 6.1%.

Bank merger: Struggling bank Wachovia (WB, Fortune 500) made the surprise announcement Friday that it accepted a $15.1 billion buyout bid from Wells Fargo (WFC, Fortune 500). Wachovia shares jumped 75% at the open, while Wells Fargo added 8%.

The deal trumps Citigroup (C, Fortune 500)'s $2.2 billion offer announced Tuesday that didn't include Wachovia's brokerage and asset management businesses. Furthermore, the deal with Wells Fargo will not require assistance from the federal government like Citigroup's deal would.

AIG: American International Group (AIG, Fortune 500), which received an $85 billion loan from the Federal Reserve two weeks ago, said it would refocus the company on its core property and casualty insurance businesses, while exploring opportunities to sell its other businesses and assets. AIG said it has drawn $61 billion in credit from the Fed as of Sept. 30. AIG gained 11%.

Economy: At 10 a.m. ET, the Institute for Supply Management will release its monthly index, the non-manufacturing ISM, that tracks the business activities of purchasing managers. For September, economists surveyed by expect an ISM of 50.4, down slightly from 50.6 in the prior month. Anything above 50 represents growth, anything below 50 means a slow-down.

Markets: The dollar rallied against the euro, but was down versus the yen and the British pound. Oil prices edged down 31 cents a barrel to $93.64.

Overseas, Japan's Nikkei index ended at a three-year low Friday over worries that the United States will fall into a recession. European stocks were higher in midday trading. To top of page

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