NEW YORK -- Stocks rallied on Monday after Federal Reserve Chairman Ben Bernanke called for a second economic stimulus plan and key lending rates showed improvement.

Bush On Economic 'State' | Bernanke Endorses 2nd Stimulus | Save Money

The Dow gained 413 points to close at the 9,265 level, the Nasdaq closed 58 points up and the S & P finished the day 44 points up.

But Monday's huge gain doesn't mean that the stock market is done with the volatility of recent weeks -- past recoveries have seen stocks ratchet up and down. Still, there is a sense on Wall Street that the worst of the selling is over.

Lending rates between banks are gradually easing, and there's less demand for the safest Treasury bills. And Bernanke has hinted that the government will take more steps to help the economy.

Earlier in the day, Bernanke told Congress he endorsed a second stimulus for the economy, which he said will be weak for several quarters.

Bernanke told the House Budget Committee that the economy will "likely" stay weak for several quarters. His testimony marked his first endorsement of another round of stimulus, which Democrats on Capitol Hill have been advocating. The Bush administration has been cool to the suggestion.

Bernanke said any stimulus package would need to kick in quickly to help boost consumer and business spending. He also said a package should include provisions to help break through the credit clog.

The Fed chief also mentioned that the measure should limit longer-term effects on the budget deficit. The deficit hit a record high in the recently ended budget year.

When pressed for his idea on the size of such a package, he said it should be "significant."

Just a few days ago, he warned that it will be a while before the economy can bounce back.

In a speech last week, Bernanke pledged to use all the tools the Fed has at its disposal to try to help the economy. Some analysts saw that comment as a sign the Fed is ready to keep cutting interest rates.

Meanwhile, Treasury Secretary Henry Paulson said Monday that government purchases of stock in banks represent an investment that should eventually make money for taxpayers.

Paulson said the government will own shares in the banks that should be paid back with a reasonable return and the government will also receive warrants for common shares in the banks.

He made his comments as he announced a streamlined application process that banks can follow to apply to sell shares to the government by a deadline of Nov. 14.

The White House said President George W. Bush is also open to the idea of a second government stimulus to further boost the U.S. economy amid the financial crisis.

Press secretary Dana Perino told reporters on Air Force One as the president flew to Louisiana on Monday for an economic event that the White House will have to see what kind of package Congress crafts.

Perino said the administration has concerns that what has been put forward so far by Democratic leaders in Congress would not actually stimulate the economy.

Poll Finds High Economic Anxiety

Just how much is the slumping economy weighing on the minds of Americans?

The share of people who think the country is moving in the right direction has plunged in just a few weeks -- from 28 percent in September to 15 percent this month.

The latest Associated Press-Yahoo News poll found the number of people who say they're personally happy is at 59 percent -- down from 70 percent last month.

About a third of those polled said they're worried about losing their jobs. Half fret that they will be unable to keep up with mortgage payments and credit card bills. And 70 percent said they're anxious that the value of their stocks and retirement benefits is down.

Just over half approve of the recently passed financial rescue plan.

Bush To Be Briefed On Lean Loan Market

President George W. Bush is heading to Main Street on Monday to hear how the lending freeze-up is hurting average Americans.

At a Chamber of Commerce roundtable in Alexandria, La., the president will hear about how hard it is to get a loan these days, either to run a new business or buy a new home.

Over the weekend, Bush expressed optimism that the government rescue effort will stabilize things.

His top economic adviser, Ed Lazear, told a Sunday talk show it's going to take several more months before the nation's clogged lending system starts working again.

Many analysts predict the economy could contract over the final three months of this year and in the first 90 days of 2009. That would meet the classic definition of a recession -- two consecutive quarters of economic contraction. Some economic analysts say the sagging economy already is in recession.

The White House has been loath to use the word "recession," both because the technical definition has not been met and because it carries such negative weight.

Lazear conceded a recession is probably under way in parts of the country.

The national unemployment rate is already over 6 percent, and it's higher in some areas.