NEW YORK — U.S. stocks on Friday surged on a report President-elect Barack Obama would nominate New York Federal Reserve President Timothy Geithner as Treasury secretary. The leap higher in the final hour of trade came on the heels of a two-session freefall and halved the market’s weekly decline.
After a volatile session, equities rocketed higher in the wake of an NBC report that Obama would appoint Geithner to head the Treasury Department. The network also reported Obama had picked New Mexico Gov. Bill Richardson for secretary of the Commerce Department, while The New York Times reported Hillary Clinton has decided to accept the nomination for secretary of state.
Of the trio, Geithner is “the one people in the market wanted to see,” said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. The choice is particularly important, he said, in light of Treasury Secretary Henry Paulson’s comments earlier in the week “of being done with TARP,” or the Troubled Assets Relief Fund.
Paulson announced the decision to let the next administration decide how to spend the remaining roughly $350 billion of $700 billion bailout package.
“The comfort level is there with Geithner,” Fitzpatrick said.
The Dow Jones industrial average surged more than 500 points before finishing at 8,046.42, up 494.13 points, or 6.5 percent. The blue-chip index lost 5.3 percent for the week.
“The market’s message is Geithner is a good choice. He’s young, he’s intelligent and he’s experienced. What this country needs are people who are young, full of energy and can put in 26-hour days.
There’s nothing like leverage,” said Hugh Johnson, chairman of Johnson Illington Advisors.
Of the Dow’s 30 components, all but two ended in the green, led by aluminum producer Alcoa Inc., up 23.2 percent.
Wal-Mart Stores Inc. gained 4.5 percent after the discount retailer unexpectedly named international chief Mike Duke to succeed Lee Scott as president and chief executive, effective Feb. 1.
Shares of Citigroup fell 20 percent as analysts pondered what the future holds for the financial-services company, which a year ago was valued at about $180 billion and now stands at $20 billion.
The S&P 500 gained 47.59 points, or 6.3 percent, to 800.03, leaving it down 8.7 percent from last Friday’s close.
Energy, utilities and materials led gains across all 10 of the S&P’s industry groups.
The Nasdaq Composite gained 68.23 points, or 5.2 percent, to 1,384.35, with the index tallying a weekly loss of 8.7 percent.
Volume on the New York Stock Exchange neared 2.4 billion, with advancers beating decliners by a 5-3 ratio. On the Nasdaq, more than 1.4 billion shares traded hands, and advancers also topped decliners roughly 8 to 5.
