NEW YORK, Jan. 28 (Xinhua) -- Wall Street rallied on Wednesday on reports of U.S. government's new plan to stabilize the banking sector and the prospect of the U.S. Congress' approval of the economic stimulus package.

    The financials got a huge boost after a White House official said that the government prepared to set up a so-called bad bank to absorb toxic investments.

    U.S. President Barack Obama's team may announce the outlines of the plan next week.

    The market also got a lift by the optimism that the U.S. Congress will approve Obama's 825-billion-dollar economic stimulus package on Wednesday.

    The proposed package, which includes a mix of new spending and tax cuts, aims to help revive the economy from the worst recession in decades.

    The Dow Jones industrial average rose 201.27 points, or 2.46 percent, to 8,376.00. The Standard & Poor's 500 Index added 28.37 points, or 3.35 percent, to 874.08. The Nasdaq Composite Index gained 53.44 points, or 3.55 percent, to 1,558.34.