Stocks rise on stimulus
Wall Street manages gains after lawmakers say compromise on economic aid package has been reached.
NEW YORK (CNNMoney.com) -- Stocks rose Wednesday, finding momentum at the end of a choppy session, after lawmakers announced that the Senate and House had reached a compromise deal on an economic stimulus package.
The Dow Jones industrial average (INDU) gained 50 points, or 0.6%. The Standard & Poor's 500 (SPX) index added 6.5 points, or 0.8%, and the Nasdaq composite (COMP) rose 6 points, or 0.4%.
Stocks seesawed through the session as investors awaited more news from Washington. But the market moved higher after Senate Majority Leader Harry Reid announced that a deal had been reached for a $789 billion bill that would combine the Senate's and House's separate, but similar measures.
However, late Wednesday, Reid and House Speaker Nancy Pelosi were still discussing a provision that impacts school construction.
Both houses are expected to vote on the compromise in the next few days. President Obama has said he wants the final version of the bill on his desk by next Monday, Presidents Day.
The major gauges all lost at least 4% Tuesday, and the Dow ended at a three-month low, after the government's bank rescue plan failed to provide the necessary details to reassure investors.
After that decline, stocks managed to bounce back Wednesday at the end of a choppy session that saw the major gauges on both sides of unchanged throughout the day.
Stocks slumped in January and have pushed lower in a choppy February on worries about the broad economy, corporate profits and unemployment. Additionally, the prolonged discussions about the economic stimulus package and the questions about the bank bailout have all taken a toll recently, said Britt Szostak, managing director for Lenox Advisors.
"It's going to be a challenging period," he said. "The stock volatility and economic uncertainty are going to continue throughout the year.
He said that while the economy could start to stabilize later in the year, stocks may not make the typical move up in anticipation of that recovery.
"Historically, the market might move up before the economy starts to rebound, but given that we are in such an unprecedented time, that can't be assumed," he said.
Thursday's news includes reports on unemployment and retail sales. The number of Americans filing new claims for unemployment is expected to have dipped to 610,000 from 626,000 last week, which was a 26-year high.
The Commerce Department releases January retail sales. Sales are expected to have fallen 0.3% after falling 2.7% in December. Sales excluding volatile autos are expected to have fallen 0.4% after falling 3.1% in the previous month.
Bank bailout: On Tuesday, Treasury Secretary Tim Geithner gave a broad outline of the bank bailout plan, a revamp of the Bush administration's Troubled Asset Relief Program (TARP).
Yet, the plan was short on details and didn't differ much from the previous one. That sent bank shares and the broader market lower Tuesday.
On Wednesday, Geithner testified about the new plan before the Senate Budget Committee, but continued to be vague on details.
The bank sector and the TARP remained in focus Wednesday. Geithner was testifying about the new plan before the Senate Budget Committee Wednesday morning.
Also Wednesday, executives at eight of the largest financial institutions were testifying before the House Financial Services committee about how they have used the first half of the TARP money.
Bank of America (BAC, Fortune 500) CEO Ken Lewis said that the bank is still lending and lending more than they would have as a result of TARP.
Top executives from Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and other firms also testified.
Company news: Blackberry-maker Research in Motion (RIMM) warned that current-quarter profit would come in at the low end of its forecasts as a result of slower sales due to the recession. Shares fell 14.5% in active Nasdaq trading.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners three to two on volume of 1.36 billion shares. On the Nasdaq, winners topped losers seven to six on volume of 2.26 billion shares.
Economy: The gap between U.S. imports and exports narrowed in December to a six-year low. The trade gap also shrank for the second year in a row.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.78% from 2.81% Tuesday. Treasury prices and yields move in opposite directions.
Lending rates were modestly lower. The 3-month Libor rate rose to 1.23% from 1.22% Tuesday, according to Bloomberg.com. The overnight Libor rate held steady at 0.30%. Libor is a bank lending rate.
Other markets: In global trading, Asian markets ended lower and European markets ended higher.
The dollar gained against the euro and fell against the yen.
U.S. light crude oil for March delivery fell $1.61 to settle at $35.94 a barrel on the New York Mercantile Exchange. Prices were volatile after the government's weekly supply report showed a bigger-than-expected build in crude supplies.
COMEX gold for April delivery rose $30.30 to settle at $944.50 an ounce.
Gasoline prices rose 1.2 cents to a national average of $1.94 a gallon, according to a survey of credit-card swipes released Wednesday by motorist group AAA. 
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