Stocks Hold to Gains

Updated from 1:08 p.m. EST

Stocks in New York continued to rally Monday afternoon as investors lauded a massive infrastructure stimulus plan President-elect Obama outlined over the weekend and as White House officials said a deal with Congress to rescue U.S. automakers is imminent.

The Dow Jones Industrial Average was gaining 349 points at 8984, and the S&P 500 was adding 37 points at 913. The Nasdaq was up 67 points at 1577.

The president-elect spurred investor enthusiasm with his intention to launch the single largest new investment in the nation's infrastructure since the creation of the federal highway system in the 1950s. The plan could create as many as 2.5 million new jobs by 2011, according to the upcoming administration.

But, the idea that this alone heals the economy is a huge question mark, says Chip Hanlon, founder and president, Delta Global Advisors. "Ultimately in the short term, you're either borrowing or using current tax payer dollars to put other tax payers back to work. It's sort of a reallocation of capital and that doesn't necessarily grow an economy," he says.

Today's rally in the market continues the trend established late Friday, when the major indices reversed course to finish in positive territory. "It might be that the 40% decline over the past year has already factored in much of the bad news already," wrote Paul Nolte, director of investments at Hinsdale Associates. "As we have been discussing over the past two months, the economic data will be bad for at least the next couple of months as the credit collapse works its way through the economy."