(By Salman - iStockAnalyst Writer)US stocks surged up on Thursday after US lawmakers indicated that they have reached an agreement in principal on Treasury’s $700 billion rescue plan meant for troubled financial institutions.

The Dow Jones Industrial Average rose 196.89 points (+1.8%), to 11022.06. The Standard & Poor's 500 Index added 23.31 points (+2%) to 1,185.75. Nasdaq Composite Index gained 30.89 points (+1.43%) to 2,186.57. Shares of financial and Telecom companies led the gains on Thursday.

According to reports, after nearly three-hour long meeting, House and Senate negotiators from both parties said that they had reached an agreement in principal to go ahead with the bailout plan. The legislation would include limits on the executive pay. It will also enable the government to take equity stakes in participating firms. Though some differences still exist, it is now being believed that there are no major hurdles and the agreement is in final stage.

According to the deal agreed upon, $250 billion will be made available immediately, while another $100 billion will be made available at the discretion of the president.

Meanwhile President Bush said "We are in a serious economic crisis in the country if we don't pass a piece of legislation". Bush said further he hoped that an agreement can be reached "very shortly."

Among financials, Lehman Brothers Holdings Inc. (LEH) jumped 40%. Freddie Mac (FRE) rose 3.2%; while Fannie Mae (FNM) added 3.5%. Bank of America (BAC) gained 4% at $34.37 while JPMorgan (JPM) leaped 7.3%.

General Electric Co. (GE) erased earlier losses and settled with a gain of 4.4%. GE on Thursday announced that it expects lower third-quarter and full-year earnings and is suspending share buyback citing ``unprecedented weakness'' in the financial-services industry as the chief reason.

American International Group Inc. (AIG) declined 2.4% after reports came that M.H Greenberg, AIG's former chief executive, is planning to sell shares of the insurer for "liquidity and other purposes".

Washington Mutual Inc. (WM), the troubled savings and loan association fell 25% to $1.69.

Among Technology stocks, IBM (IBM) gained 3.1%. Oracle Corp. (ORCL) increased 2.61% after the company announced a plan to sell business computers with pre-packaged database programs, marking its first foray into the hardware business.