(By Salman - iStockAnalyst Writer)

US stocks rallied on Friday after a worse than expected jobs data spurred speculation that the US Senate will quickly pass the massive stimulus plan in order to pull the economy out of deepening slump. Financial stocks soared on reports that Treasury Secretary Timothy Geithner will unveil the Obama administration's bank rescue plan in a speech at noon on Monday.    

The Dow Jones Industrial Average rallied 217.52 points or 2.70% to finish at 8,280.59. The S&P 500 gained 22.75 points or 2.69% to 868.60. The Nasdaq Composite soared 45.47 points or 2.94% to 1,591.71.

For the week, Dow was up 279.73 points or 3.5%. S&P climbed 42.72 points or 5.17%, while Nasdaq Composite settled with a weekly gain of 115.29 points or 7.80%.

Senator Harry Reid said on Friday that Senate may vote on stimulus package, later in the day. "We've made progress since last night .... I think we're going to be able to work something out." He added "I would hope that probably around 5:00 or 7:00 today, we'll have something that we can vote on that would reflect the big picture of what we need to move this to conference."

A Labor Department release on Friday showed the economy lost 598,000 jobs in January, worse than 540,000 job losses expected by economists. In December, non-farm payrolls dropped 577,000. The unemployment rate shot up to 16 year high of 7.6% in January from 7.2% in January. Economists had predicted the rate to rise to 7.5%.

Financial stocks skyrocketed. Bank of America (NYSE: BAC) jumped $1.29 or 26.65% to $6.13. J.P Morgan (NYSE: JPM) leaped $3.09 or 12.59% to $27.63. Citigroup (NYSE: JPM) surged 38 cents or 10.76% to $3.91. American Express Co. (NYSE: AXP) and Goldman Sachs (NYSE: GS) gained over 4% each.

Shares of Aon Corp (NYSE: AOC) surged $4.17 or 11.44% after the world’s biggest insurance broker announced that its fourth-quarter net income plunged 95% to $10 million, or 3 cents a share, from $207 million, or 64 cents a share in the comparable quarter, a year ago. Earnings from continuing operations, excluding certain items, jumped 19% to 81 cents a share, beating the consensus estimate of 79 cents. Revenue decreased 4% to $1.9 billion, falling short of analyst estimates of $2.06 billion.

Hartford Financial Services Group Inc. (NYSE: HIG) plunged $2.41 or 15.97% to $12.68 after the insurer said that it swung to a fourth quarter net loss of $806 million or $2.71 a share, compared to net income of $595 million or $1.88  share in the prior year quarter. Moody's lowered insurer's long-term senior debt rating one notch to "Baa1," indicating a below average credit quality. The ratings agency also downgraded property-and-casualty and life-insurance subsidiaries to "A1," the fifth highest investment grade, from "Aa3.

Technology stocks rallied. Hewlett Packard (NASDAQ: HPQ) increased     $1.76 or 5.02% to $36.85.International Business Machines (NYSE: IBM) rose $4.23 or 4.58% to $96.14.    

Caterpillar Inc. (NYSE: CAT) added $1.67 or 5.28% to $33.28    
 
Home improvement retailer Home Depot (NYSE: HD) gained $1.13 or 5.04% to $23.53.        

Late on Thursday, News Corp. (NASDAQ: NWS) said that it slipped to a fiscal second quarter loss of $6.4 billion, or $2.45 a share, compared to a profit of $832 million, or 27 cents a share in the fiscal second quarter of last year. On an adjusted basis, the company earned $320 million, or 12 cents a share. Revenue slumped to $7.88 billion from $8.6 billion. Shares of the company finished at $7.68, up 23 cents or 3.09%.

Toyota Motor Corp. (NYSE: TM), the world's biggest automaker admitted on Friday that it is heading for its first annual loss since as falling sales and stronger yen hit its revenue.  The Japanese automaker expects a net loss of 350 billion yen ($3.85 billion) for the year through March.

European stocks finished with solid gains. The U.K. FTSE rose 62.94 points or 1.49% to close at 4,291.87. The German DAX and French CAC jumped 2.97% and 1.84% respectively.

Asian stocks settled up. The Nikkei 225 rose 126.97 points or 1.60% to 8,076.62. Hang Seng Index in Hong Kong added 476.14 points or 3.61% to end at 13,655.04.

NYMEX crude oil for March delivery declined 89 cents, or 2.2%, to settle at $40.28 a barrel.

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