Stocks Clinging to Their Gains

Updated from 2:26 p.m. EDT

Stocks in New York were holding to strong gains Tuesday following a massive selloff in the previous session.

The Dow Jones Industrial Average was up 370 points at 10,735, and the S&P 500 was adding 50 points to 1156. The Nasdaq climbed 86 points to 2070.

On Monday, stocks got crushed after the House of Representatives voted down the Treasury Department's $700 billion financial-sector stabilization plan. The Dow plunged 777 points, or 7%, its worst single-day loss ever in terms of points and its worst percentage loss since Sept. 17, 2001. The S&P 500 gave up 8.8%, and the Nasdaq fell 9.1%.

After Congress rejected the bailout, banks became increasingly worried about lending to one another, as the London interbank offered rate on overnight dollar loans skyrocketed more than four percentage points to 6.875%, a record high, according to Bloomberg data.

On Monday, overnight dollar Libor, a measure of rates that a group of banks charge for short-term loans to other banks, stood at 2.57%.

Traders had anticipated passage of the Treasury's program, which would provide liquidity in installments to financial firms in exchange for mortgage-backed securities and other hard-to-value assets. Lawmakers are working to put together another proposal and quell the market's anxiety.

Phil Roth, chief technical analyst at Miller Tabak, had expected an upside open following Monday's big drop. He pointed out that the financial sector, which has been at the center of market turmoil, held lows established on Sept. 18. Those lows were higher than the ones reached in mid-July, which is encouraging, said Roth. Nevertheless, "I think we've got a long way to go before we can say we have a bottom for a whole bull market," he said.