NEW YORK - Investors shuttled between optimism and pessimism Wednesday, finally betting the government might help the economy out of recession after all.
News late in the session that key lawmakers agreed on a $790 billion economic stimulus plan sent stocks moderately higher in a partial rebound from a plunge Tuesday that took the Dow Jones industrials down 382 points. Stocks meandered for much of Wednesday's trading as investors struggled for a second day over what to make of developments in Washington.
The government has been the biggest player on Wall Street this week.
Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said investors are simply trying to keep ahead of the rush of news about the banking system and the economy.
Stocks had plummeted Tuesday as investors showed their frustration with what many saw as a lack of detail from Treasury Secretary Timothy Geithner about the latest version of the government's bank bailout plan.
On Wednesday, the uncertainty continued. Investors snapped up heavily beaten-down bank stocks as chief executives of the nation's top banks appeared before a House committee to answer questions about how they have used more than $160 billion in taxpayer money to date.
But a sustained turn higher didn't come until key members of the Senate announced a deal on the stimulus bill and said President Barack Obama could sign it within days. The measure includes provisions for unemployment benefits, food stamps, health coverage and more. It also includes billions for states facing yawning budget gaps.
Investors have been eager for any signals that the economy is set to recover. Supporters hope the bill's mix of spending and tax cuts will increase consumer spending, which accounts for more than two-thirds of U.S. economic activity.
But investors are still cautious. Wednesday's 51-point rise in the Dow is "not a strong statement here," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. "More information is what we need. What I mean by that is what exactly has been agreed to with the stimulus plan."
And Wall Street remains nervous about how, exactly, Geithner's financial rescue plan will work out: how it will assess the banks, how it will price their bad assets, and how it will recreate a market for those assets.
Investors "reacted to bad news yesterday. There wasn't more bad news today," Caughey said. "People didn't have a good sleep and say 'Whew, was I wrong yesterday."'
The Dow Jones industrial average rose 50.65, or 0.64 percent, to 7,939.53.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 6.58, or 0.80 percent, to 833.74, and the Nasdaq composite index rose 5.77, or 0.38 percent, to 1,530.50.
The Russell 2000 index of smaller companies rose 2.18, or 0.49 percent, to 447.95.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 5.14 billion shares compared with 6.68 billion shares traded Tuesday.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.76 percent from 2.82 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.29 percent from 0.30 percent late Tuesday.
Light, sweet crude for March delivery fell $1.61 to settle at $35.94 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies. Gold prices rose again Wednesday, bringing their two-day gain to nearly 6 percent.
Philip S. Dow, managing director of equity strategy at RBC Wealth Management, said investors are eager for any insights into which banks might survive and which others might not. He said the plan announced Tuesday didn't help investors answer that question.
"Somebody has to take some losses," he said. "The market is hungry for some kind of a plan with very specific steps to it and what we got was nothing of the order."
Bank of America Corp. rose 51 cents, or 9.2 percent, to $6.07, while JPMorgan Chase & Co. rose $1.47, or 6 percent, to $26.09. State Street Corp. rose $1.87, or 7 percent, to $28.48.
Energy stocks fell as oil slid. Exxon Mobil Corp. fell $1.56, or 2.1 percent, to $74.58, while Devon Energy Corp. fell $3.57, or 6.4 percent, to $52.63.
Meanwhile, Research in Motion Ltd. weighed on the technology-heavy Nasdaq. The maker of BlackBerry devices warned after the end of trading Tuesday that its fourth-quarter earnings likely will come in at the low end of its forecast. The stock fell $8.28, or 14.5 percent, to $48.76.