NEW YORK - The optimism is building on Wall Street.
The financial sector led stocks sharply higher Wednesday on investor hopes that the Obama administration will create banks to absorb the bad assets weighing down the financial system. The Standard & Poor's 500 index, a benchmark for the overall stock market, completed its first four-day rally since late November. And the Dow Jones industrial average jumped 201 points.
Financial companies surged on the notion that the government could take soured debt such as defaulting mortgages off the hands of banks and place them in a so-called "bad bank" to hold toxic assets. Investors have been worrying that banks won't be able to resume more normal levels of lending without somehow dumping or walling off the bad debt that is corroding their balance sheets. And the economy can't recover from a 14-month-old recession without improvements in lending and consumer confidence.
Bank shares jumped: Wells Fargo & Co. surged 31 percent, Citigroup Inc. jumped 19 percent and Bank of America added 13 percent.
Investors were also more upbeat ahead of a House vote on an $819 billion stimulus plan that contains a mix of new spending and tax cuts. Wall Street hopes that the stimulus and other measures will help free the economy from its worst recession in decades.
The Dow industrials rose 200.72, or 2.46 percent, to 8,375.45.
Broader stock indicators also gained. The S&P 500 index jumped 28.38, or 3.36 percent, to 874.09. The index last recorded as many straight advances in a five-day run that ended Nov. 28.
The Nasdaq composite index added 53.44, or 3.55 percent, to 1,558.34.