(By Salman - iStockAnalyst Writer)
US Stocks edged higher in afternoon trade on signs that bailout plan will be finally approved by lawmakers at US House Of Representatives.

Earlier, US markets crashed on Monday after lawmakers unexpectedly rejected the proposed $700 billion bailout plan meant to calm the markets and restore investor’s confidence. The rescue plan is the largest instance of government intervention since Great Depression of 1929 and is being touted as "mother of all bailouts". On Monday, the Dow Jones Industrial average sank almost 7%, the S&P 500 plunged 8.8%, and the Nasdaq tumbled 9.1%. Monday’s drop was the biggest for Dow Jones in its entire history.

At 13:32 New York time, The Dow Jones Industrial Average advanced 344.39 points (+3.32%), to 10,709.84. The Standard & Poor's 500 Index rose 47.26 points (+4.27%) to 1,153.65. Nasdaq Composite Index gained 77.31 points (+3.90%) to 2,061.04.

President Bush, who earlier expressed disappointment on defeat of bailout bill, on Tuesday, said that economic damage due to the current credit crisis will be "painful" and "long lasting". "Financial security is prime concern and Congress should take action. Bush said. "Consequences of inaction is getting worse every day “Bush continued further. He was hopeful that the plan will be passed and said “House rejection is not the end of legislation process".

Obama, the Democrat presidential candidate, also expressed his optimism "I'm confident we're going to get there," he said in Colorado. "It's going to be a little rocky. Obama said the plan ``will get done.'' Obama also proposed to raise the limit on federal deposit insurance to $250,000 from $100,000.

Republican John McCain also requested lawmakers to ``go back to the drawing board'' and come up with legislation that will pass.

Chairman of the banking committee, Christopher Dodd, said senators may reconsider bill tomorrow.
Money market showed signs of further distress. Overnight borrowing costs jumped on Tuesday as U.S Congress rejected proposed $700 billion bank bailout plan.

The London interbank overnight rate jumped to 6.78125% from 2.56875% Monday.

Financials led the gain in Tuesday’s rally. Citigroup Inc. (C) rose 13.9%, J.P. Morgan Chase (JPM) jumped 11.8%, while Bank of America Corp. (BAC) gained 9.9%.

Software maker Microsoft (MSFT) climbed 3.3%. iPhone maker Apple Inc (AAPL) was trading up 5.2%. Chip maker Intel Corp (INTC) rose 5.8%.

Caterpillar Inc. (CAT) fell 2.4%. International Business Machines Corp. (IBM) slipped 1.5%. Retailer Home Depot Inc. (HD ) was also down 1%.

The Conference Board reported that U.S. consumer confidence climbed in September for a third consecutive month. Consumer Confidence Index rose to 59.8 from a revised 58.5 in August. Analysts were expecting a reading of 55.5.

Yields on 10-year Treasury notes rose 7 basis points as investors shunned bonds.

Gold futures declined and touched the low of $869.10 an ounce, while Crude-oil futures rose. Dollar rose against Euro on signs of trouble in European economy. Ireland guaranteed the deposits of institutions including Allied Irish Banks (AIB) and Bank Governments of Belgium, France and Luxembourg further pumped 6.4 billion euros ($9.2 billion) into Dexia, a lender to local governments and infrastructure projects. of Ireland (IRE) for two years.

European markets finished with impressive gains. UK FTSE closed at 4902.45, up 83.68 points (+1.74%) from previous closing. German DAX and French CAC declined 0.41 % and 1.99% respectively.
Among Asian stocks Nikkei 225 retreated 4% in Tokyo. In Hong Kong, the Hang Seng Index finished with marginal gains.

Russia, South Korea and Taiwan banned short selling. Hong Kong's top financial regulator too indicated that it may warn "abusive" short selling.

Disclosure: Author does not own any of the stocks discussed here.