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Federal Reserve Chairman Ben Bernanke has given Wall Street a double dose of reassurance.

Bernanke told Congress Monday that the recession might end this year and that regulators aren’t planning to nationalize banks.

The news alleviated some of investors’ deepening worries about the economy and the banking system, and the Dow Jones industrial average, coming off its lowest levels since 1997, jumped about 240 points.

In his semiannual report to the Senate Banking Committee, Bernanke predicted that the economy was likely to keep contracting in the first six months of 2009 but that "there is a reasonable prospect" the recession would end this year.

He warned that a recovery would require getting credit and financial markets to operate normally, and that the government must continue working with ailing banks to bring them back to profitability. To the market’s relief, though, the Fed chief said formally nationalizing the banks "just isn’t necessary."

Although Bernanke’s testimony helped ease some pressure on the market, it also came after days of heavy selling that left the Dow average and the Standard & Poor’s 500 index near 12-year lows, so a bounce in stocks wasn’t a surprise as bargain-hunting traders picked up pummeled shares.

Some better-than-expected quarterly numbers from Home Depot Inc. also helped lift the market’s mood.

The market grew more upbeat as well ahead of a speech by President Barack Obama scheduled Tuesday night. Beaten-down financial shares gained as the White House said Obama would provide more details about his plans to help stabilize the financial system. The president is also expected to make the case that more has to be done to revive the economy.

"There’s growing optimism that Obama can deliver the details that the market is so desperately looking for in his speech," said Ryan Larson, senior equity trader at Voyageur Asset Management. If it gets those details, he added, the market’s upward momentum could continue short term personal loan.

The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation’s banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday that they could convert the government’s stock in the banks to common shares from preferred shares.

Some traders were encouraged Monday after the S&P 500 index managed to stay just above its Nov. 21 trading low of 741.02. Investors searching for a recovery look for signs that the market can test lows and then bounce higher.

It was a welcome sign after the Dow industrials fell last week below their Nov. 21 lows.

Still, many analysts expect the market to remain volatile for the foreseeable future.

Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles, said the stock market’s rallies were likely to be based on hope or on rebounds from selloffs.

He contends that Wall Street still hasn’t seen the wrenching decline that is often needed to scare investors from the market and set the ground for a lasting recovery.

"The underlying fundamentals just aren’t there to support anything that’s sustainable right now," Hughes said. "We haven’t seen the capitulation that you’d want to see before you’d get thoroughly enthused."

The market’s slide has been tough on long-term savers. An investor who in 1997 had $50,000 in a fund that tracks the S&P 500 would have lost money; the fund would now be worth $46,256. Still, stocks tend to perform better after steep pullbacks, and their long-term returns often outpace other investments.

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