Wall Street got a boost of confidence late today following a report that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary.
NEW YORK — Wall Street staged a surprising comeback today, with the major indexes jumping more than 5 percent and the Dow Jones industrials surging nearly 500 points in a late afternoon rally, ending another volatile week that saw stocks reach six-year lows.
The Dow Jones industrial average closed up 494.13, or 6.5 percent, at 8,046.42.
The Standard & Poor’s 500 index rose 47.59, or 6.3 percent, to 800.03, and the Nasdaq composite index rose 68.23, or 5.2 percent, at 1,384.35.
Stocks today erased about half of the losses that came in steep selling Wednesday and Thursday after investors got an unexpected jolt of confidence this afternoon following an NBC News report that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary.
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Investors have been looking for a clear message from Obama on who will lead his economic brain trust at a time when the country is facing its biggest financial crisis since the Great Depression. In addition, some on Wall Street have grown frustrated with outgoing Treasury Secretary Henry Paulson over his handling of the government’s effort to rescue the banking system.
A senior Democratic official familiar with the deliberations confirmed to The Associated Press that Geithner is likely to be named as Treasury secretary. The official requested anonymity because the nomination hasn’t been formally announced.
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 the government’s financial rescue plan. The directors of the Federal Deposit Insurance Corp. voted today to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending.
Stocks fluctuated throughout most of today’s trading session, but stocks moved sharply higher in the final half hour after the report on Geithner.
Despite today’s gains, stocks are still down sharply for the week. The Dow has lost 5.31 percent, while the S&P 500 fell 8.39 percent and the Nasdaq lost 8.74 percent.