* "Tremendous progress" cited in bailout talks
* Market shrugs off bleak data, GE's profit warning
* Financial shares lead rally
* Dow and S&P 500 up 2.4 pct, Nasdaq up 2.1 pct
(Updates to afternoon, changes byline)
By Steven C. Johnson
NEW YORK, Sept 25 (Reuters) - U.S. stocks soared on
Thursday as Congress neared a deal on a $700 billion financial
sector bailout that investors hope will thaw credit markets
and revive lending.
All three major U.S. stock indexes jumped almost 3 percent
to session highs in anticipation of a bailout agreement in
afternoon trading. Stocks pulled back slightly, but were still
up over 2 percent as a report from the Wall Street Journal
online said the bailout bill would approve a $700 billion
fund, but it would be paid in installments.
Bank shares spearheaded the rally, with JPMorgan Chase
<JPM.N> and Bank of America <BAC.N> among the biggest boosts
for the Dow and S&P 500.
Fear that Congress would delay the rescue package weighed
on stocks earlier this week, but optimism waxed after Sen.
Chris Dodd, chairman of the Senate Banking Committee, said on
Thursday that House and Senate negotiators had reached
"fundamental agreement" on the principles of a bailout.
The Treasury Department declined to comment on earlier
statements from Sen. Charles Schumer, the New York Democrat
who chairs the congressional Joint Economic Committee, that a
deal could be reached Thursday.
"I certainly think that Congress will pass something and
that will help for a little while. It gives us some time to
unwind some of the positions and see where we stand when the
smoke clears," said Warren Simpson, managing director at
Stephens Capital Management in Little Rock, Arkansas.
The Dow Jones industrial average <> was up 262.60
points, or 2.42 percent, at 11.087.77, after shooting up
nearly 300 points -- or almost 3 percent -- to a session high
at 11,129.19 on anticipation of an agreement on the bailout
bill.
The Standard & Poor's 500 Index <.SPX> was up 28.85
points, or 2.43 percent, at 1,214.72, slightly below a session
high at 1,220.03. The Nasdaq Composite Index <> was up
44.70 points, or 2.07 percent, at 2,200.38, also near its
session high at 2,210.74.
Late on Wednesday, U.S. President George W. Bush said the
United States was in a serious financial crisis.
Companies that are often seen as economic bellwethers,
such as IBM <IBM.N>, up 3.7 percent at $120.82, and
Caterpillar <CAT.N>, up 1.3 percent at $62.52, gained on hopes
the rescue package could spur a pickup in consumer and
business spending.
Bank of America shares rose 6.9 percent to $35.33 and
JPMorgan shares rose 8.6 percent to $44.
Nike <NKE.N> shares rose almost 10 percent to $65.13 after
earnings from the world's largest athletic footwear and
apparel company beat Wall Street estimates.
The market's advance came despite economic reports that
were bleak all around and a profit warning from General
Electric <GE.N>.
One report showed that the number of people filing for
jobless benefits unexpectedly surged in the latest week.
Other government data showed a sharper-than-expected slide
in orders for durable goods and a drop in sales of new
single-family homes in August to their lowest in 17 years.
The grim economic news and a likewise gloomy outlook for
corporate earnings mean an equities rally driven by the rescue
plan are likely to be short-lived, said Keith Hembre, chief
economist at First American Funds in Minneapolis.
"It will probably be measured in weeks, not months," he
said. "We're still playing defense, and there's nothing in the
plan that suggests it will improve domestic demand or turn the
cyclical downtrend in growth, jobs or corporate earnings."
(Additional reporting by Kristina Cooke; Editing by Jan
Paschal)
