Dow ends up nearly 500 on Geithner treasury report

Wall Street staged a surprising comeback Friday, 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.

Stocks erased about half of the losses that came in steep selling Wednesday and Thursday after investors got an unexpected jolt of confidence late Friday 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.

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 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.

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.

According to preliminary calculations, the Dow rose 494.13 points, or 6.54 percent, on Friday to settle at 8,046.42. The benchmark 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.

Obama considers Geithner, Summers for Treasury

Timothy Geithner, president of the Federal Reserve Bank of New York, former Treasury Secretary Lawrence Summers and former Federal Reserve Chairman Paul Volcker are among those being considered for the Treasury post.

After an election victory on Tuesday that will make him the first black U.S. president, Obama also appeared to be getting close to announcing his chief of staff.

U.S. Rep. Rahm Emanuel of Illinois, a Democratic lawmaker known for this hard-charging style, has been offered the job of leading Obama's White House staff, according to Democratic sources who spoke on condition of anonymity.

The 48-year-old congressman has close ties to Obama's inner circle and is a fellow Chicagoan. He was expected to accept the job, which would make him the gatekeeper to the Oval Office.

Obama has already launched a transition team that was working fast to fill the next administration's economic and homeland security teams, according to one of the Democratic sources.

Heading up that team are Valerie Jarrett, a close friend of Obama, Pete Rouse, his U.S. Senate chief of staff and John Podesta, former chief of staff to Bill Clinton.

Amid the worst financial crisis since the Great Depression, Obama wants to move quickly to be prepared to handle a probable recession and the wars in Iraq and Afghanistan.

Obama's office is maintaining secrecy on the transition, which is occurring in the 11 weeks before January 20, when he will be sworn in as successor to President George W. Bush.

Whoever gets the Treasury job will be faced with guiding the $700 billion economic bailout package and the regulatory reform needed to prevent a repeat of the current crisis.

In addition to Geithner, Summers and Volcker, the short list for Treasury includes former Clinton administration adviser Laura Tyson.

Obama could soon announce other economic posts as well. Likely to end up in top advisory roles are University of Chicago economist Austan Goolsbee and Jason Furman, a former economic adviser to President Clinton.

FOREIGN POLICY ADVISERS

For secretary of state, Massachusetts Democratic Sen. John Kerry, former diplomat Richard Holbrooke, outgoing Republican Sen. Chuck Hagel and former Georgia Democratic Sen. Sam Nunn are among the names in the mix.

James Steinberg, a former Clinton adviser, is a top contender for national security adviser. Susan Rice, another former Clinton aide, could be considered for that job or another senior post.

Obama also has relied heavily on three foreign policy experts on his campaign staff who are likely to end up in the White House or the State Department. They are Mark Lippert and Denis McDonough, both former Senate aides, and Ben Rhodes, Obama's foreign policy speechwriter.

With wars under way in Iraq and Afghanistan, Obama might consider keeping Robert Gates on as secretary of Defense. He might also consider tapping former Navy Secretary Richard Danzig, a close adviser.