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NEW YORK – Investors have taken another big gamble on the government's plans to help the economy — hoping that this one will finally work.

All the major indexes rose more than 2 percent Friday, including the Dow Jones industrial average, which rose more than 200 points as Wall Street looked past another bleak jobs report and awaited word from Washington about an economic stimulus plan and changes to the government's financial rescue program. The advance helped propel the indexes to their first winning week after four straight weeks of losses, and put the Nasdaq composite in positive territory for the year to date.

The Senate was expected to vote on its version of a stimulus plan that would include a mix of spending and tax cuts. The Senate bill would cost $937 billion; the House already passed a similar version.

Financial stocks led the market as investors also awaited the government's latest revisions to its lifeline for banks. Treasury Secretary Timothy Geithner and other top officials are close to finishing a plan to overhaul the government's $700 billion financial rescue fund. Geithner is expected to announce the changes in a speech on Monday.

Some investors were worried that the changes would involve nationalizing many banks and, in the process, wiping out shareholders. Many investors are hoping the plan will relax rules requiring businesses to assign a value to all of their assets each quarter. Advocates say altering the rule even temporarily could make it easier for banks to lend without worrying about depleting their cash reserves and running afoul of accounting standards.

Investors waiting for word on the government's plans were unfazed by a terrible employment reading. The Labor Department said U.S. employers slashed 598,000 jobs in January, the most since late 1974. The unemployment rate rose to 7.6 percent, the highest since late 1992.

"All focus right now is now is really on Washington," said Dan Cook, senior market analyst at IG Markets in Chicago. He said investors are hoping the unemployment report was bad enough to goad lawmakers into swift action on the stimulus plan.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said investors now are wondering "will government stimulus stop this virus that's spreading throughout the country?"

Cook said investors are eager for the stimulus plan to pass even if it takes time to work its way into the economy, as many economists predict.

"We just want to see a plan and have a direction," he said. "We can adjust from there and make moves on the fly."

But analysts caution that the plan won't repair the economy's problems overnight.

"As the realization sets in that this is going to take some time to work its way into the system confidence could wane a bit," said Matt King, chief investment officer for Bell Investment Advisors, in Oakland, Calif. In that case, the market would be following its pattern in recent months as other government steps were unveiled — early euphoria dissipated as the reality of a troubled economy set in.

The Dow industrials rose 217.52, or 2.70 percent, to 8,280.59 after rising 106 on Thursday.

Broader stock indicators also jumped. The Standard & Poor's 500 index rose 22.75, or 2.69 percent, to 868.60, and the Nasdaq composite index rose 45.47, or 2.94 percent, to 1,591.71.

The day's gains have left the Nasdaq higher for the year; investors have been turning to the index's tech stocks on the belief they will help lead the market higher. The Nasdaq ended the week with a huge 7.81 percent gain, while the Dow was up 3.5 percent and the S&P 500 rose 5.17 percent.

The Russell 2000 index of smaller companies rose 15.62, or 3.43 percent, to 470.70. It rose 6.13 percent for the week.

Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where consolidated volume came to 6.38 billion shares compared with 6.51 billion shares traded Thursday.

On Thursday, the major indexes soared more than 1 percent as Wall Street shrugged off troubling economic reports and searched for bargains among battered retail and technology stocks.

Bond prices were mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.99 percent from 2.92 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.27 percent from 0.26 percent.

The dollar was mostly higher against other major currencies. Gold prices edged higher.

Light, sweet crude fell $1 to $40.17 a barrel on the New York Mercantile Exchange.

Friday's rally reflects fear among some investors that they will miss out on a jump in stocks if the government comes up with the right mix of medicine for the economy, King said. Some of the buying was also likely the result of short covering — investors who borrowed stock and sold it on expections the market would fall had to buy stock to repay the loans.

Many of the Friday's steepest gains occurred in hard-hit parts of the market like financials and retailers.

Financial stocks rose. Bank of America Corp. jumped $1.29, or 26.7 percent, to $6.13, while JPMorgan Chase & Co. rose $3.09, or 12.6 percent, to $27.63. Smaller banks also rose. Fifth Third Bancorp rose 99 cents, or 60.4 percent, to $2.63. State Street Corp. advanced $2.95, or 10.7 percent, to $30.49.

Among retailers, Macy's Inc. advanced 95 cents, or 10.9 percent, to $9.70.

Overseas, Britain's FTSE 100 rose 1.49 percent, Germany's DAX index rose 2.97 percent, and France's CAC-40 rose 1.84 percent. Japan's Nikkei stock average rose 1.60 percent.

WASHINGTON – It's shaping up to be another lousy year for workers, with more companies expecting to cut payrolls in the months ahead.

That's part of the latest outlook from forecasters in a survey to be released Monday by the National Association for Business Economics that depicts the worst business conditions in the U.S. since the report's inception in 1982.

A man who has been looking for work over the last year holds a sign at an intersection in Miami, Florida

Thirty-nine percent predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.

The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing.

"Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further," said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.

Just last week, Microsoft Corp. said it will slash up to 5,000 jobs over the next 18 months. Intel Corp. said it will cut up to 6,000 manufacturing jobs and United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year.

The NABE survey of 105 forecasters was taken Dec. 17 through Jan. 8.

Also in the survey, 52 percent said they expected gross domestic product to fall by more than 1 percent this year. GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic fitness. The last time GDP fell for a full year was in 1991, a tiny 0.2 percent dip. The economy shrank by 1.9 percent in 1982, when the country was suffering through a severe recession.

Forecasters have grown more pessimistic about the outlook. In the October survey, no forecaster thought GDP would fall by more than 1 percent.

In terms of business conditions, more reported customer demand dropping, capital spending reductions and shrinking profit margins.

Altogether the report "depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," Johnson said.

Many analysts predict the economy will have contracted at a pace of 5.4 percent in the fourth quarter when the government releases that report on Friday. If they are correct, that would mark the worst performance since a 6.4 percent drop in the first quarter of 1982. The economy is still contracting now — at a pace of around 4 percent, according to some projections.

WASHINGTON – The recession is killing jobs at an alarming pace, with tens of thousands of new layoffs announced Monday by some of the biggest names in American business — Pfizer, Caterpillar and Home Depot.

More pink slips, pay freezes and other hits are expected to slam workers in the months ahead as companies desperately look for ways to survive.

Monty McCleskes fills out an application form at a job fair organized by The News-Press newspaper

"We're just seeing the tip of the iceberg — the big firms," said Rebecca Braeu, economist at John Hancock Financial Services. "There's certainly other firms beneath them that will lay off workers as quickly or even quicker."

Looking ahead, economists predicted a net loss of at least 2 million jobs — possibly more — this year even if President Barack Obama's $825 billion package of increased government spending and tax cuts is enacted. Last year, the economy lost a net 2.6 million jobs, the most since 1945, though the labor force has grown significantly since then.

The unemployment rate, now at a 16-year high of 7.2 percent, could hit 10 percent or higher later this year or early next year, under some analysts' projections.

Obama called on Congress Monday to speedily enact his recovery plan, warning that the nation can't afford "distractions" or "delays."

With the recession expected to drag on through much of this year, more damage will be inflicted on both companies and workers.

The mounting toll was visible Monday as roughly 40,000 more U.S. workers got the grim news.

Pharmaceutical giant Pfizer Inc., which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, said they each will slash 8,000 jobs.

Home Depot Inc., the biggest home improvement retailer in the U.S., will get rid of 7,000 jobs, and General Motors Corp. said it will cut 2,000 jobs at plants in Michigan and Ohio because of slow sales.

"We are seeing no improvement in labor market conditions," said Sal Guatieri, senior economist at BMO Capital Markets Economics. "This year could be as bad as last year in terms of layoffs."

In response to deteriorating business conditions, Caterpillar Inc., the world's largest maker of mining and construction equipment, disclosed nearly 20,000 job cuts, most of which already have been made. They include 5,000 new layoffs of white collar workers, which will occur globally by the end of March.

Earlier actions included the elimination of 2,500 Caterpillar workers through a buyout offer announced in December, the termination of about 8,000 contract and temp agency workers, and the reduction of 4,000 full-time factory workers through firings and buyouts.

Texas Instruments Inc., which makes chips for cell phones and other gadgets, will cut 3,400 jobs due to slumping demand. The Dallas-based company said Monday it will slash 12 percent of its work force — 1,800 jobs through layoffs and another 1,600 through voluntary retirements and departures. And Brooks Automation Inc. said it plans to get rid of 350 jobs, or 20 percent of its work force. It will be the second round of cuts for Brooks, which makes software and equipment for chip manufacturers.

Oilfield services provider Halliburton Co. said it will eliminate jobs in markets particularly hard hit by the recession, though it didn't provide details. Its larger rival Schlumberger Ltd. said last week it will cut up to 5,000 jobs worldwide in the first half of 2009 and consider further reductions this spring.

The flurry of layoffs comes on the heels of similar action by big-name companies just last week.

Microsoft Corp. said it will slash up to 5,000 jobs over the next 18 months. Intel Corp. said it will cut up to 6,000 manufacturing jobs. And United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year.

And there's no end in sight. In a survey by the National Association for Business Economics, 39 percent of forecasters predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans. About 17 percent thought hiring would increase.

A new report by the placement firm Challenger, Gray & Christmas found that companies are often turning to a creative combination of measures to cut costs — beyond layoffs. Those measures include pay freezes or reductions, forced vacations, travel cutbacks and the elimination of year-end bonuses.

"Many companies cannot cut their payrolls as deeply as they have in previous downturns, simply because they did not do as much hiring during the most recent expansion," said John Challenger, president of the firm. "As a result, they are forced to find alternative ways to keep costs down."

Not all the economic news was as grim Monday. Sales of previously owned homes and a separate barometer of economic activity each logged unexpected gains in December. But economists didn't view them as signs of improvement.

"Keep the party hats in boxes and the Champagne in the cellar," said Bernard Baumohl, chief global economist at the Economic Outlook Group. "It's one month's set of data and they tell us little about the future."

Economists said the uptick in home sales was due to sinking prices spurring buyers. In the other report, a government-influenced balloon in the nation's money supply largely affected the outcome.

Wall Street closed moderately higher. The Dow Jones industrials rose 38.47,or 0.48 percent, to 8,116.03, after briefly moving into negative territory.

The National Association of Realtors said sales of existing homes rose 6.5 percent to an annual rate of 4.74 million last month. Buyers took advantage of dramatically lower prices, especially in distressed states like California, Florida and Nevada, where foreclosures are soaring.

The nationwide median sales price sank to $175,400, down 15.3 percent from a year ago. That marked the biggest annual drop on records going back to 1968. The median is the middle point, where half the homes sell for more and half for less.

For all of last year, existing-home sales totaled 4.9 million, down more than 13 percent from the previous year, and the lowest since 1997.

Meanwhile, the Conference Board's monthly forecast of economic activity rose 0.3 percent in December. But that pickup was influenced mainly by federal efforts to ease the credit crisis, which caused the supply of money to expand. If the jump in the money supply were excluded, the board's index would have dropped sharply, economists said.

The national economy, meanwhile, is continuing to backslide.

Many analysts predict the economy will have contracted at a pace of 5.4 percent in the fourth quarter when the government releases that report Friday. If they are correct, that would mark the worst performance since a 6.4 percent drop in the first quarter of 1982. The economy is still contracting now — at a pace of around 4 percent, according to some projections.