Bulls Cheer Obama's Stimulus Talk; Dow Gains 3.5%

Updated from 4:09 p.m. EST

Stocks in New York rallied Monday 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, which at one point traded above the 9000 mark, finished up 298.76 points, or 3.5%, at 8934.18. The S&P 500 gained 33.63 points, or 3.8%, to 909.70, and the Nasdaq tacked on 62.43 points, or 4.1%, to 1571.74.

The president-elect spurred investor enthusiasm with his intention to launch the single largest 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 jobs by 2011, according to the upcoming administration.

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

Monday's rally continued the uptrend 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."