Traders gather at the Bank of America kiosk on the floor of the New York Stock Exchange in New York, Sept. 24, 2008.

NEW YORK, Sept. 25 (Xinhua) -- U.S. stocks rallied Thursday on reports that Congress reached an agreement in principle on financial rescue plan.

Investors were encouraged as key lawmakers said they would present the 700-billion-U.S. dollar plan to the Bush administration and hoped for a vote by both houses of Congress within days.

On Thursday, the Labor Department said the number of people seeking unemployment benefits increased by 32,000 to a seasonally adjusted 493,000 last week, the highest level in seven years.

The Commerce Department said sales of new homes fell sharply in August to the slowest pace in 17 years. The average sales price also fell by the largest amount on record.

The Dow Jones average rose 196.89, or 1.82 percent, to 11,022.06. The Standard & Poor's 500 index advanced 23.31, or 1.97 percent, to 1,209.18 and the Nasdaq composite index rose 30.89, or1.43 percent, to 2,186.57.