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NEW YORK (CNNMoney.com) -- Stocks rallied Monday morning, with the Dow up over 200 points, lifted by President-elect Barack Obama's plan to boost the economy and signs that Detroit's automakers will stay out of bankruptcy.

The Dow Jones industrial average (INDU) jumped over 200 points or 2.6% in the early going. The Standard & Poor's 500 (SPX) index rose almost 3% and the Nasdaq composite (COMP) gained 2.3%.

"The market now is rallying on hopes that we can begin to stave off massive layoffs in the auto industry," said Peter Cardillo, analyst for Avalon Partners.

On Friday, stocks rallied despite the Labor Department's worst monthly job report in 34 years, showing a loss of 533,000 jobs in November and bringing the total to 1.9 million lost jobs so far this year.

"You can't lose jobs at this rate for very long," said Robert Brusca, chief economist at Fact and Opinion Economics. "At this point, you have to become an optimist, or you have to become a super pessimist and say that were headed for a Great Depression."

The job losses have continued into December. On Monday, Dow Chemical (DOW, Fortune 500) said it would cut 5,000 jobs, equaling 11% of its workforce, and close 20 plants. Shares gained 5%.

Stimulus hopes: Over the weekend, Obama pledged to invest in infrastructure, energy programs, and school construction projects to get people working and build a stronger economy.

"We understand that we've got to provide a blood infusion to the patient right now to make sure that the patient is stabilized. And that means that we can't worry short term about the deficit," he said in an interview on NBC's "Meet the Press."

"We've got to make sure that the economic stimulus plan is large enough to get the economy moving," Obama said.

Big Three: Signs of a deal that would keep General Motors (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler out of bankruptcy court - at least through the end of March - also lifted sentiment.

Congressional Democrats and the Bush White House had reached an agreement in principle to provide stopgap support for the U.S. auto industry, congressional and industry sources said late Friday.

While the money is less than the automakers were asking for in testimony before Congress, the package is designed to keep them operating so that the new Congress and the Obama administration will have at least a couple of months to draft and pass a longer-term solution.

General Motors stock gained 11% in morning trading, and Ford jumped about 12%.

World markets: Expectations that governments worldwide will keep introducing measures to stimulate their economies helped boost investors' mood worldwide.

Hong Kong's Hang Seng index rallied 8.7% and Japan's Nikkei finished the session 5.2% higher. In European trading, Britain's FTSE 100 was up more than 5% in morning trading, while the DAX in Frankfurt and the CAC in Paris were up about 7%.

Money and oil: Oil rose $2.95 a barrel to $43.76. The dollar gained versus the yen but slipped against the euro and the British pound.