Financial markets grew more upbeat Thursday as political leaders said they had struck an agreement in principle on a massive spending plan to revive the crippled financial system.
The Dow Jones industrial average jumped about 200 points on optimism about the bailout, and demand for safe-haven assets remained high but eased slightly as some investors bet that a deal would help unclog credit markets.
Stock market investors got a lift when key lawmakers said they would present the $700 billion plan to the Bush administration and hoped for a vote by both houses of Congress within days. Still, some resistance remained from House Republicans as the closing bell on Wall Street rang ahead of a meeting of congressional leaders at the White House.
While markets showed varying levels of optimism as the plan gained momentum, stocks could remain volatile as details of the government's prescription for the ailing banking sector emerge.
"The market's going to experience volatility as the terms become known," said Doug Roberts, chief investment strategist at Channel Capital Research.
The latest statements of support for the rescue effort came after Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged lawmakers Tuesday and Wednesday to quickly sign off on the plan, which they said would help prop up the economy by removing billions of dollars in risky mortgage-related assets from financial firms' balance sheets. Distrust of the financial companies that hold these assets has led to a severe tightening of the credit markets, which in turn threatens the overall economy by making it harder and more expensive for businesses and consumers to borrow money.
