U.S. Stocks Solidly Higher On Citi Rescue, Obama Team

NEW YORK (MarketWatch) -- U.S. stocks Monday rallied for a second consecutive day after the government agreed to rescue Citigroup Inc. and as President-elect Barack Obama directed his new economic team to get to work.

Naming New York Federal Reserve President Tim Geithner for Treasury secretary and Harvard economist Lawrence Summers to run the National Economic Council, Obama urged his team to quickly develop recommendations for a recovery plan for "Wall Street and Main Street." .

"This should help market psychology, along with the Fed's intervention with Citigroup," said Peter Cardillo, chief market economist at Avalon Partners. "The most important piece of the puzzle in the market is confidence."

The Dow Jones Industrial Average was up 279.8 points to 8,326.22 with 28 of its 30 components posting gains, led by Citigroup , up 50.9%.

"The financials are leading the bounce on the government's backstop for Citi," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

The $326 billion plan to save Citi follows intense weekend negotiations that have the government backing as much as $306 billion of the bank's troubled assets and taking charge of executive bonuses. .

Obama was told of the government's move to save Citigroup, President George W. Bush said Monday. .

The S&P 500 Index climbed 37.53 points to 837.56, and the Nasdaq Composite Index added 59.36 points to 1,443.71.

Financials, telecommunications and consumer-discretionary shares fronted gains among all 10 of the S&P's industry groups.

Volume on the New York Stock Exchange topped 1 billion, with advancers overtaking decliners nearly 7 to 1. On the Nasdaq, almost 638 million shares traded, and advancers beat decliners roughly 5 to 2.

For sale

Equities further added to their gains after the National Association of Realtors reported the resale of single-family residences fell 3.1% in October to 4.98 million, just below the 5 million expected by analysts surveyed by MarketWatch.

A late-hour rally pushed U.S. stocks to huge gains Friday, with the Dow Jones Industrial Average jumping 494 points, the Nasdaq rising 68 points, and the S&P 500 surging 47 points. The surge came on reports that Obama would nominate Geithner for Treasury secretary.

"The importance of this announcement is twofold. First, with Paulson publicly stating that he is not interested in pursuing the second $350 billion, it is putting the pressure on the Obama administration to get the process moving as quickly as possible to get these funds. Second, Geithner was a key government official in the financial-rescue plan, which means he has intimate knowledge of what needs to be done," said Pado.

Obama's economic team was officially announced Monday.

Target Corp. late Friday announced it rejected a proposal by activist investor Bill Ackman to spin off real-estate holdings.

Campbell Soup Co. fell 7.8% after the food maker said its fiscal first-quarter net income declined nearly 4%.

After the close, Hewlett-Packard Co. and Analog Devices Inc. are scheduled to report earnings.

Oil futures gained $4.47 to $54.40 a barrel. .

Overseas, the FTSE 100 closed with gains of nearly 10% as oil producers and mine operators struck double-digit percentage gains. .

Asia stocks weren't as strong, with Hong Kong's benchmark Hang Seng Index dropping 1.35%. Tokyo was closed. .


By Kate Gibson
  • CBSNews

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