Wall Street extended its rally into a second session Monday as investors grew optimistic that President-elect Barack Obama's plan for a huge infrastructure spending package will help boost the crippled economy. The Dow Jones industrial average rose nearly 300 points.
By the end of trading, the Dow was up 298.76 to 8,934.18 after rising 259 points on Friday. The gain puts the blue-chip index up for December.
Obama announced over the weekend plans for the largest U.S. public works spending program since the creation of the interstate highway system a half-century ago. That could bolster the economy by putting thousands of people to work building schools and other construction projects.
That helped to give a lift to a range of companies, from machinery makers to materials producers. Alcoa Inc., the world's biggest aluminum producer, surged 13 percent on the news; while heavy-equipment maker Caterpillar Inc. soared 14 percent.
Investors also appeared more comfortable that the government is closer to legislation that would dole out billions to America's three biggest automakers within a week. Congress is expected to pass a $15 billion bailout for Ford Motor Co., General Motors Corp., and Chrysler as soon as Tuesday.
Obtaining the aid might come in exchange for the jobs of the companies' top executives. Sen. Chris Dodd, D-Conn., who chairs the Senate Banking Committee, said Sunday that Rick Wagoner, GM's chief executive, "has to move on."
Major U.S. stock indexes fell last week after a number of negative reports seemed to indicate the recession is showing no signs of weakening. However, as the week progressed, the market appeared to be taking the bad news in stride — even Friday's Labor Department report that showed the nation lost more than a half a million jobs last month. The report raised hopes that the government would take more steps to stimulate the economy.
Scott Fullman, director of derivative investment strategies with WJB Capital, warned that the move higher for U.S. markets should be treated cautiously. He said credit still remains tight around the world, and that there are still a number of other worries hanging over the market.
"There's a chance we could be higher for the day, but I'd be very cautious about jumping in with both feet and expecting what could be a Santa Claus rally going into the New Year," he said. "The fact is, we're not seeing the credit markets opening up, we're not seeing buying of the distressed debt, and that leads to additional worries for stocks."