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Updated from 9:43 a.m. EDT

Stocks on Wall Street Friday were tracking higher ahead of a hotly anticipated congressional vote on a bill to rescue struggling financial firms. A new bank merger deal that will not require government assistance and an increasingly likely rate cut from the

Federal Reserve

were bolstering buying sentiment.


Dow Jones Industrial Average

climbed 216 points to 10,704, and the

S&P 500

was better by 31 points at 1145. The


added 62 points to 2039.

On Thursday, stocks finished with sharp losses as traders digested some bearish economic data and waited for signs that a $700 billion

bailout package

for the financial sector would pass the House of Representatives. The bill, slated to go before a vote Friday, is expected to pass the House by a narrow margin.

"Anyone who thinks that this is going to be a silver bullet is going to be sorely disappointed," said Doug Roberts, chief investment strategist at He said the problems in credit markets and the economy have to work themselves out over a long period of time. Because of the global nature of the liquidity crisis, Roberts said, a solution will require a global coordinated effort among central banks. He said the bailout package is "not the seminal event that I think people are talking about. It's the first in a series of steps."

Today's bounce in the major indices was a result of oversold conditions after heavy selloffs earlier this week, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. He said that a not-horrendous employment number and optimism about the House's passage of the relief package contributed to buying enthusiasm.

As investors awaited legislative aid,


(WB) - Get Free Report

announced it has agreed to be sold to

Wells Fargo

(WFC) - Get Free Report

in a $15.1 billion deal that

Wells Fargo

says will not require assistance from the Federal Deposit Insurance Corp. or any other government agency. The deal seems to negate another deal brokered by the FDIC Monday under which


(C) - Get Free Report

agreed to acquire all of the banking subsidiaries of Wachovia. Citi is threatening legal action to stop the Wells Fargo deal and keep its own merger deal with Wachovia in place.

"Now you see a deal that's being done without being forced," said Sparks. He said that it's a positive for the market to see a bank merger based on valuation rather than the impulse on the part of the government to save a failing company.

Not all news from the financial sector was as rosy. Swiss bank


(UBS) - Get Free Report

said it would cut 2,000 jobs as part of its reorganization efforts.

Insurance firm


(AIG) - Get Free Report

said it would sell several of its business segments in an effort to pay back an $85 billion loan from the government.

The Wall Street Journal

reported that

Washington Mutual CEO Alan Fishman

won't stay on at

JPMorgan Chase

(JPM) - Get Free Report

, which acquired WaMu after it failed on Sept. 25.

In other board shakeups, mortgage packager

Fannie Mae

( FNM) announced that former

CEO Daniel Mudd

will not be keeping his seat on Fannie's board.

Meanwhile, several media reports suggested that Japanese firm

Mitsubishi UFJ



merge its investment banking unit with Morgan Stanley

(MS) - Get Free Report

operations in Japan.

Elsewhere, private equity firm


(BX) - Get Free Report

bought a $600 million stake in

China National BlueStar

, according to a report by



In the technology arena,


(HPQ) - Get Free Report

may, according to a report in the


, be gearing up to release a



As for economic data, the Department of Labor reported that the September unemployment rate remained at 6.1%, the same rate as in August and nonfarm payrolls decreased by 159,000, the largest drop since March 2003 and twice the decline feared by economists. The average work week declined to 33.6 hours from 33.7 in August.

Although economists' estimates imply that the employment number would hurt sentiment, Sparks of Schaeffer's said that judging by behavior in futures markets, the market's expectations may have been lower than those of economists. "Maybe it was one of those things where the unspoken fear was much greater than where the consensus number was," he said.

The dismal employment numbers were spurring speculation that the Fed would soon cut its target interest rate. Futures markets were pricing in 100% odds of a rate cut before the Fed's next meeting on Oct. 29.

Although the Fed probably would prefer not to lower rates, it may have to, said Doug Roberts of "I think we're talking at least 25, maybe 50 basis points." He said that increased weakness in European markets is contributing to strength in the dollar, which gives the Fed more room to loosen monetary policy.

The Institute for Supply Management's services index came in at 50.2, slightly ahead of economists' projections for a read of 50.

In commodities, crude oil was up $1.21 to $95.18. Gold was losing $4.40 to $839.90.

Longer-dated U.S. Treasury securities were falling in price. The 10-year was losing 24/32 to yield 3.72%, and the 30-year was down 23/32, yielding 4.19%. The dollar was higher vs. the yen and euro but weakening against the pound.

Across the seas, European exchanges, such as London's FTSE and Frankfurt's DAX, were largely trading higher.

Asian indices

like the Nikkei in Japan and Hong Kong's Hang Seng, meanwhile, closed with losses.