Updated from 2:16 p.m. EST

Pumped by a "bad bank" twist in the financial bailout, stocks in New York held their gains into the final hour of trading Wednesday as the Fed again promised to use "all available tools" to promote growth and stability, and in anticipation of a House vote on the stimulus package.

The

Dow Jones Industrial Average

was up 176 points at 8350, and the

S&P 500

was rising 29 points at 874. The

Nasdaq

tacked on 51 points at 1556.

Financial stocks rallied from the get-go Wednesday as the Obama administration is reportedly weighing a

"bad bank" concept associated with its overhaul the Troubled Asset Relief Fund, meant to rescue the U.S. financial institutions. Some estimates have the government potentially taking on $1 trillion of bad assets, according to the

Wall Street Journal

.

Bank of America

(BAC) - Get Report

and

Citigroup

(C) - Get Report

were up more 13% and 17%, and

JPMorgan

(JPM) - Get Report

tacked on nearly 9%.

Also, Goldman Sachs ticked up 9%,

Morgan Stanley

(MS) - Get Report

garnered 10%, and

Wells Fargo

(WTC)

gained 22%.

The Fed

held its benchmark Federal funds rate at a range of 0 to 0.25%, and reiterated that it will stay at an exceptionally low rate for some time at the wrap up of a two-day U.S. Federal Reserve meeting.

"Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight," according to the Federal Open Market Committee statement.

The Fed said it continues to purchase large quantities of agency debt and mortgage-backed securities, and stands ready to expand the size and length of the program and to purchase longer-term Treasury securities as conditions warrant. It's also implementing the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.

The Committee said it sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

Working hard to stave off an even worse economic storm, President Obama met with Republican leaders on Tuesday to highlight the urgency of the $825 billion American Recovery and Reinvestment Plan, which was debated in the House Wednesday. The bill is expected to pass despite opposition to the tax and spending proportions from House Republicans.

With one eye on Washington, investors had the other tracking more incoming earnings. Wells Fargo, for one, reported a

fourth-quarter loss , as it moved fast to write off shaky loans picked up in its acquisition of Wachovia.

AT&T

(T) - Get Report

shares were moderately lower after the company said

its fourth quarter earnings fell 24%, with top and bottom line figures slightly undercutting analyst estimates. But Yahoo! garnered a 7% jump Wednesday, lending a boost to tech stocks, as investors were impressed with new CEO Carol Bartz's

earnings conversation after Wednesday's close.

Boeing

(BA) - Get Report

tacked on nearly 3% after its release and news that

it will reduce its workforce by 6% or 10,000 positions. The company reported that a strike and production problems landed it a fourth-quarter loss, but it forecast higher earnings and revenue for 2009.

Also,

ConocoPhillips

(COP) - Get Report

was marginally higher after reporting a $31.8 billion loss of its own, on whopping charges, but beating estimates on an adjusted basis.

In other news,

General Motors

(GM) - Get Report

and the United Auto Workers union will eliminate a

"jobs bank" program by Feb. 2. The government required the closing of the controversial program -- which paid factory workers even when plants were closing or no jobs were available -- in order for GM to collect $13.4 billion in federal loans.

In commodities, gold fell 13.20 to $888.20 an ounce, while oil added 58 cents to settle at $42.14 a barrel.

Crude oil fell $4.15 a day prior as weak economic data added fuel to worries about continually lagging demand.

According to a report by the Energy Information Administration on Wednesday, U.S. commercial crude oil inventories increased 6.2 million barrels last week over the week prior, and much greater than the expected boost of 3.4 million barrels. At 338.9 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.

Gasoline inventories, meanwhile, declined by 100,000 million barrels to 219.9 million, while analysts expected stockpiles to

rise

by 1.8 million barrels.

"It's all about the weak demand -- gasoline production fell, and the reason we have less supply is because demand is falling faster and refiners don't have any incentive to make it," says Phil Flynn, Alaron energy analyst.

" When you see these kinds of things happen, it reminds you of the big economic picture that's overshadowing everything," Flynn says. "The bulls are trying desperately to hang on to the $40 a barrel line, which is a sign of optimism that things can improve. But to maintain a rally, the oil market and product market will need help from the economy."

Longer-dated Treasuries were recently mixed; the 10-year note was recently down 7.5/32 to yield 2.6%, the 30-year was rising 7/32, yielding 3.3%.

The dollar was again stronger against the yen, and weaker against the pound and euro.

Overseas, the FTSE in London and the DAX in Frankfurt were in low-single digit surges. Stocks in Asia were mixed, with Japan's Nikkei eking out a slight gain for the day, but Hong Kong's Hang Seng ended in negative territory.