NEW YORK—Wall Street staged a big advance in the next to last session of 2008 Tuesday after Washington’s latest lifeline to the auto industry bolstered hopes that the government will do whatever is necessary to cut short the recession.

Investors found solace in news that General Motors Corp.’s troubled financing arm received $5 billion of financing. The Treasury Department said late Monday it would provide the money to GMAC Financial Services LLC from the $700 billion bank rescue program.

The injection is on top of the $17.4 billion in loans the Bush Administration agre...

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