NEW YORK — Investors are placing bets on an improvement in the economy after key lawmakers announced an agreement this afternoon on a $789 billion economic stimulus plan.

Stocks turned higher on the announcement after drifting lower in early afternoon trading. The moves come a day after a steep selloff on disappointment over the government's plans for reshaping its financial rescue fund.

But word of the agreement on the stimulus measure cheered investors. It was not immediately clear when final votes in the two houses would occur.

The measure includes provisions for unemployment benefits, food stamps, health coverage and more. It also includes billions for states facing yawning budget gaps.

Investors are eager for any signals that the economy could begin to recover. Proponents hope the bill's mix of spending and tax cuts will promote consumer spending, which accounts for more than two-thirds of U.S. economic activity. Spending has stalled since the mid-September bankruptcy of Lehman Brothers Holdings froze credit markets and deepened the recession.