(By Salman - iStockAnalyst Writer)

US stocks bounced back on Wednesday after key lawmakers confirmed that they have reached a deal over economic stimulus package that now goes before the House of Representatives and Senate for final passage.

The Dow Jones Industrial Average rose 50.65 points or 0.64% to finish at 7,939.53. The S&P 500 added 6.58 points or 0.80% to end at 833.74. The Nasdaq Composite advanced 5.77 points or 0.38% to 1,530.50.

Senate Majority Leader Harry Reid, D-Nev., announced on Wednesday that House and Senate lawmakers have reached a compromise on economic stimulus bill. "The middle ground we've reached creates more jobs than the original Senate bill and costs less than the original House bill," said Reid.

The package, now worth $789 billion, includes tax cuts and spending aimed at pulling out the US economy out of deepening slump.

Financials stocks rallied. Citigroup Inc. (NYSE: C) surged 34 cents or 10.15% to $3.69.Bank of America (NYSE: BAC) increased 51 cents or 9.17% to $6.07. Morgan Stanley (NYSE: MS) soared $2.12 or 10.20% to $22.91. J.P Morgan (NYSE: JPM) and Goldman Sachs (NYSE: GS) climbed over 4%.

XL Capital (NYSE: XL) skyrocketed $1.78 or 61.38% to $4.68 after Bermuda-based insurer posted fourth quarter operating profit that exceeded consensus estimates. The company also announced that it will cut its dividend and reduce 10% of its workforce.

General Electric (NYSE: GE) finished at $11.94, up 32 cents or 2.75%.

Energy giant Exxon Mobil (NYSE: XOM) retreated $1.56 or 2.05% to $74.58.

Technology stocks gained. Microsoft Corp. (NASDAQ: MSFT) advanced 41 cents or 2.18% to $19.21. International Business Machines (NYSE: IBM) rose $1.89 or 2.03% to $95.16.

Research In Motion (NASDAQ: RIMM) tumbled $8.28 or 14.51% to $48.76 after the Blackberry maker said its fourth-quarter profit and gross margin would be at the low end of its previous forecast range.

Nvidia Corp. (NASDAQ: NVDA) plummeted $1.17 nor 12.55% to $8.15 after the graphics chip maker said that it slipped to a fiscal fourth-quarter loss of $147.7 million, or 27 cents a share, compared to a profit of $257 million, or 42 cents a share in year earlier period. Revenue plunged 60% to $481 million from $1.20 billion. On an adjusted basis, the company lost $94.4 million, or 18 cents a share. Street analysts had estimated the company to lose 12 cents a share on $587 million in sales.

Shares of Sirius XM Radio Inc (NASDAQ: SIRI) sank over 50% on reports that satellite radio operator is preparing to file bankruptcy.

On the front of economic data, a report by Census Bureau showed that the U.S. trade balance fell to a six-year low of $39.9 billion in December from a revised $41.6 billion in November.

European stocks finished with gains. The U.K. FTSE rose 21.18 points or 0.50% to close at 4,234.26. The German DAX and French CAC advanced 0.54% and 0.26% respectively.

Asian stocks settled with losses. Hang Seng Index in Hong Kong slumped 341.43 points or 2.46% to 13,539.21.

NYMEX crude oil for March delivery declined $1.50, or 4%, to settle at $36.05 a barrel.

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