Wall Street Boosted By Cabinet Pick News

Dow Jumps 500 Points On Report That Obama Plans To Name Timothy Geithner As Treasury Secretary

(CBS/AP)  Wall Street staged a comeback Friday, with the major indexes jumping more than 5 percent and the Dow Jones industrials surging nearly 500 points.

The late afternoon rally ended another volatile week that saw stocks reach six-year lows.

Stocks erased about half of the steep losses from Wednesday and Thursday, as investors got an unexpected jolt of confidence following an NBC News report that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary.

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.

"Something needed to be done on the economy," said Ben Halliburton, chief investment officer at Tradition Capital Management. "The fact that they've got the team together, maybe that is going to shorten the period of indecision."

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.

CBS News correspondent Anthony Mason said that Wall Street likes the appointment of Geithner for two reasons. First, it ends all the uncertainty and second, it provides a seamless transition.

"As head of the New York Fed, Geithner was essentially Bernanke's point man with Wall Street," Mason said. "It was Geithner who brokered the deal that saved Bear Stearns back in March."

However, Geithner's known for liking to work behind the scenes and he's never really sought out the spotlight, which could be a problem, Mason notes.

"This is the guy who's going to be the point man in leading us out of the worst economic crisis since the Depression," he said. "He will have to learn how to become a communicator."

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 Friday to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending.

Stocks fluctuated throughout most of trading Friday, as fresh concerns over the stability of the financial sector prevented the market from establishing any sustainable gains. But stocks moved sharply higher in the final half hour after the report on Geithner.

The Dow rose 494.13 points, or 6.54 percent, to settle at 8,046.42. The Standard & Poor's 500 index jumped 47.59, or 6.32 percent, to 800.03, and the Nasdaq 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, to 406.54.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 2.37 billion shares.

With the steep pullbacks earlier this week, the Dow began Friday's session down 43.1 percent this year, while the S&P 500 index - a benchmark for the overall U.S. stock market - was down 48.8 percent. The Nasdaq composite index had lost 50.4 percent this year.

And despite Friday'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. Paper losses for the week in U.S. stocks came to $1 trillion, according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stocks traded in America.

In the two previous days, the Dow had lost a staggering 873 points, more than 10 percent of its value, and the broader Standard & Poor's 500 index had sunk 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," Halliburton said. "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 has been removed, there are still plenty of unknowns facing the market.

As a result, volatility will remain a major force on Wall Street for some time to come, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

He said worries about marquee companies from General Motors Corp. to Citigroup Inc. are unnerving investors.

"What we're seeing is these symbols of American business history really suffering and prompting investors to call into question the viability of the system," Ablin said, referring to the functioning of the broader economy.

Investors have grown increasingly anxious this week that losses from souring debt will swamp banks, even those given financial support through the government's $700 billion rescue plan. Citigroup, in particular, is a concern for Wall Street because the company hasn't booked a profit in the past four quarters.

As the banking giant's shares slid below $4, analysts said Friday it may be forced to merge or sell some of its prized businesses. Citigroup has already raised $75 billion in capital this year, including a $25 billion cash investment from the government - and none of it has been enough to muster confidence.

Investors have also worried about the fate of GM, Ford Motor Co. and Chrysler LLC. The heads of the companies, warning that automakers are perilously low on cash, have been asking Washington for $25 billion in loans. But lawmakers have likely put off a vote on whether to extend a lifeline until next month and have 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 to Wall Street's worries about the state of the economy.

Bond prices fell Friday as credit markets eased somewhat following a freeze-up Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.19 percent from 3.00 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, 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 a barrel on the New York Mercantile Exchange. The dollar fell against other major currencies, while gold prices rose.

Overseas, Japan's Nikkei stock average jumped 2.70 percent. In European trading, Britain's FTSE 100 fell 2.43 percent, while Germany's DAX index fell 2.20 percent, and France's CAC-40 fell 3.33 percent.

[lochlan-2009]

"Dow Jumps 500 Points On Report That Obama Plans To Name Timothy Geithner As Treasury Secretary"

Are you kidding me? The whole world invested in blue chips Friday, because of who Obama picked as treasurer?
They sure can blow a hell of a lot of smoke up our *** in the Associated Press these days. In fact, the Associated Press has done so little in telling the REAL news these last eight years, I''d put them right up their with the Enquirer as far as misinforming, spinning and omitting information to the world and they don''t even remotely go into the meat of a story anymore. I don''t know who the elitist is who bought and payed for them, but the world is now less informed than they were when the information age began.

[mrjustice1]

Titled:
*US AND OTHER GOVERNMENTS SENDING THE WRONG MESSAGE
**TRANSPARENCY OF SWISS AND ALL SECRET BANK ACCOUNTS MUST BEGIN

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By bailing out those parasitic so-called investment bankers, investment advisers, brokers, as well as their accountants, their lawyers, their marketers, and other of their sales agents who aid, abet and facilitate their unrighteous operations - both on and off Wall St - legitimization of continuing future investment schemes is encouraged. In essence, such FUTURE licenses to steal and to destroy an enormously large number of people''s FUTURE financial security can be EXPECTED.

The entire world community and governments thereof, must not only prosecute and mete out long-term prison sentences to said unconscionable financial criminals, but it/they must also act accordingly, for seizure of their monies, their property, their assets, etc.

Immediate freezing and subsequent transparency of foreign and offshore, secret bank accounts MUST also begin without delay!

[whitemale08]

to be able to do something for the economy that John McCain couldn''''t do is, again, barf. In fact, almost all of the blather that comes from the media about Obama is - you guessed it - barf.


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Posted by AmJoe at 05:28 PM : Nov 22, 2008--

Hey idiot, since you don''t know anything about economics, I suggest you keep your mouth shut.

This economy will not recover because Bush basicly told America to ''eat your houses'' by debt and home-equitly loans.

That helped feed the now over a Quadrillion derivatives that the private Federal Reserve System is going bankrupt in trying to monetize all of that with worthless paper-butt-money.

It will not work, our economy will not recover and unless Obama calls in Lyndon Larouche to show him how to SHUT-DOWN the bankrupt Federal Reserve System and cancel over a Quadrillion in worthless derivative-swaps, we will be plunged into a New Dark Age.

This would be far worse then even a Great Depression because this would cause the reduction of the human population by 70% through starvation, pestilence and war.

DON''T YOU DARE SAY THIS ECONOMY CAN RECOVER!!!!

THIS NOT JUST A RECESSION/DEPRESSION BUT A BREAKDOWN CRISIS OF THE GLOBAL FINANCIAL SYSTEM!!!!

[amjoe-2009]

The national economy will have largely recovered sometime next year. This is not a function of who has been elected president. However, you should expect the media to again faun over Obama as the economic savior of the USA. This will, of course, be barf. Our economy will recover, because our economy always recovers. The notion that Obama was somehow going to be able to do something for the economy that John McCain couldn''t do is, again, barf. In fact, almost all of the blather that comes from the media about Obama is - you guessed it - barf.

[jydavis1]

looks like more foxes guarding the hen house in Obama''s zionist cabinet .. Geithner, Bernanke, Summers, Volker, Greenspan etc .. do you have to be Jewish to run monetary/fiscal policy for the United States ? haven''t we been robbed enough ?

[perk235]

Here''s an old headline that started everything:

U.S. Allows Citibank to Sell Derivatives

Published: September 15, 1994

Bucking a trend toward more regulatory restrictions on derivatives, Federal bank regulators said today that they had given formal permission for the first time for a bank to sell stock-index derivatives.

[perk235]

This is truly astounding. There is one sentence in this article about the FDIC guaranteeing 1.4 TRILLION dollars of bank debt. Doing some more searching I found:

The FDIC also took steps Friday to make it easier for private investors to buy banks seized by the government.

The FDIC also will guarantee deposits in non-interest-bearing "transaction" accounts by removing the current $250,000 insurance limit on them through the end of next year. That could add as much as $500 billion to FDIC-backed deposits.

"Transaction accounts" = BUSINESS ACCOUNTS.

THE FDIC IS MOVING FROM INSURING INDIVIDUAL ACCOUNTS TO SHORING UP BANKS AND BUSINESS ACCOUNTS.

You can get your last dollar that they will not have money left to insure individual accounts with all they are doing for banks and business accounts.

[perk235]

That will only work in the short term, since most only live in the short term, it may work for them.Their kids may be screwed, we can only hope!
Posted by dkhorse1 at 05:22 AM : Nov 22, 2008

Yup.
Posted by DeckardBR at 05:45 AM : Nov 22, 2008
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And the cost to the average person will be high. High enough to crumble the faith in the US government to back it''s securities?

[dkhorse1]

Wealthy Americans don''''t need to make anything! The government is stealing money from you and GIVING IT TO THEM! How much education do you need to see THAT!

Posted by DeckardBR at 05:17 AM : Nov 22, 2008

That will only work in the short term, since most only live in the short term, it may work for them.Their kids may be screwed, we can only hope!

[dkhorse1]

America needs to make something to make money. How much education do you need to understand that?

If you can''t understand that, you''re life and/or education has failed you.