7:28 am - DJIA is up in the last hours .

7:28 am - Stocks surge on report of Geithner nomination

Stocks surge on report of Geithner nomination NEW YORK (AP) - Wall Street staged a comeback Friday, with the major indexesjumping more than 5 percent and the Dow Jones industrials surging nearly 500points. The late afternoon rally ended another volatile week that saw stocks reachsix-year lows. Stocks erased about half of the steep losses from Wednesday and Thursday, asinvestors got an unexpected jolt of confidence following an NBC News report thatPresident-elect Barack Obama plans to name New York Federal Reserve PresidentTimothy Geithner as Treasury secretary. Investors have been looking for a clear message from Obama on who will leadhis economic brain trust at a time when the country is facing its biggestfinancial crisis since the Great Depression. In addition, some on Wall Streethave grown frustrated with outgoing Treasury Secretary Henry Paulson over hishandling of the government's effort to rescue the banking system. "Something needed to be done on the economy," said Ben Halliburton, chiefinvestment officer at Tradition Capital Management. "The fact that they've gotthe team together, maybe that is going to shorten the period of indecision." A senior Democratic official familiar with the deliberations confirmed toThe Associated Press that Geithner is likely to be named as Treasury secretary.The official requested anonymity because the nomination hasn't been formallyannounced. The advance in stocks also came as the FDIC said it would guarantee up to$1.4 trillion in U.S. banks' debt for more than three years as part of thegovernment's financial rescue plan. The directors of the Federal DepositInsurance Corp. voted Friday to approve the plan, which is meant to break thecrippling logjam in bank-to-bank lending. Stocks fluctuated throughout most of trading Friday, as fresh concerns overthe stability of the financial sector prevented the market from establishing anysustainable gains. But stocks moved sharply higher in the final half hour afterthe report on Geithner. The Dow rose 494.13 points, or 6.54 percent, to settle at 8,046.42. TheStandard & Poor's 500 index jumped 47.59, or 6.32 percent, to 800.03, and theNasdaq composite advanced 68.23, or 5.18 percent, to 1,384.35. The Russell 2000 index of smaller companies rose 21.23, or 5.51 percent, to406.54. Advancing issues outnumbered decliners by about 2 to 1 on the New York StockExchange, where volume came to 2.37 billion shares. With the steep pullbacks earlier this week, the Dow began Friday's sessiondown 43.1 percent this year, while the S&P 500 index -- a benchmark for theoverall U.S. stock market -- was down 48.8 percent. The Nasdaq composite indexhad lost 50.4 percent this year. And despite Friday's gains, stocks are still down sharply for the week. TheDow has lost 5.31 percent, while the S&P 500 fell 8.39 percent and the Nasdaqlost 8.74 percent. Paper losses for the week in U.S. stocks came to $1 trillion,according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearlyall stocks traded in America. In the two previous days, the Dow had lost a staggering 873 points, morethan 10 percent of its value, and the broader Standard & Poor's 500 index hadsunk to its lowest level since 1997. Still, Friday's rally sets up the potential for more gains going forward,analysts said. "I think we're clearly set up for some sort of relief rally," Halliburtonsaid. "People have been holding their breath for a relief rally for weeks.Unfortunately, most of the rallies have been short-lived." But while the cloud of uncertainty surrounding Obama's economic team hasbeen removed, there are still plenty of unknowns facing the market. As a result, volatility will remain a major force on Wall Street for sometime to come, said Jack Ablin, chief investment officer at Harris Private Bankin Chicago. He said worries about marquee companies from General Motors Corp. toCitigroup Inc. are unnerving investors. "What we're seeing is these symbols of American business history reallysuffering and prompting investors to call into question the viability of thesystem," Ablin said, referring to the functioning of the broader economy. Investors have grown increasingly anxious this week that losses from souringdebt will swamp banks, even those given financial support through thegovernment's $700 billion rescue plan. Citigroup, in particular, is a concernfor Wall Street because the company hasn't booked a profit in the past fourquarters. As the banking giant's shares slid below $4, analysts said Friday it may beforced to merge or sell some of its prized businesses. Citigroup has alreadyraised $75 billion in capital this year, including a $25 billion cash investmentfrom the government -- and none of it has been enough to muster confidence. Investors have also worried about the fate of GM, Ford Motor Co. andChrysler LLC. The heads of the companies, warning that automakers are perilouslylow on cash, have been asking Washington for $25 billion in loans. But lawmakershave likely put off a vote on whether to extend a lifeline until next month andhave asked the automakers for detailed plans about how they would use the money.The prospect of a bankruptcy filing by one or more of the companies has added toWall Street's worries about the state of the economy. Bond prices fell Friday as credit markets eased somewhat following afreeze-up Thursday. The yield on the benchmark 10-year Treasury note, whichmoves opposite its price, jumped to 3.19 percent from 3.00 percent lateThursday. The yield on the three-month T-bill, considered one of the safestinvestments, rose to 0.02 percent from 0.01 percent late Thursday. Light, sweet crude for January delivery rose 51 cents to settle at $49.93 abarrel on the New York Mercantile Exchange. The dollar fell against other majorcurrencies, while gold prices rose. Overseas, Japan's Nikkei stock average jumped 2.70 percent. In Europeantrading, Britain's FTSE 100 fell 2.43 percent, while Germany's DAX index fell2.20 percent, and France's CAC-40 fell 3.33 percent.