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Wall Street stages late rally on Geithner news
November 21, 2008 / 1:40 AM / 9 years ago

Wall Street stages late rally on Geithner news

NEW YORK (Reuters) - U.S. stocks stormed higher in a late rally on Friday to cap another volatile week as investors welcomed reports that President-elect Barack Obama has chosen his point person to combat the U.S. economic crisis, instilling confidence about the administration’s ability to take action.

<p>Traders work in close quarters on the main trading floor of the New York Stock Exchange early in the trading session in New York City, November 21, 2008. REUTERS/Mike Segar</p>

Stocks limped into the day after a back-to-back pummeling that had left the S&P 500 at an 11-year low, and spent most of the day drifting in and out of positive territory. Markets shot higher around 3 p.m. when NBC news reported that Timothy Geithner, president of the Federal Reserve Bank of New York, would be nominated as U.S. Treasury secretary, driving the Dow and the S&P up more than 6 percent.

The news lifted uncertainty over who Obama would appoint to lead Treasury amid the worst economic crisis since the Great Depression.

“It is a bit of good news in that it takes the uncertainty out,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “Any time you take uncertainty out of Wall Street, they love it.”

Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital in Baltimore, said the news on Geithner raised hopes there could be “some direction from Washington as to how we’re going to proceed with the balance of the TARP and how we’re going to proceed with the Citi situation and with the situation in general with the banks.”

The Dow Jones industrial average .DJI jumped 494.13 points, or 6.54 percent, to 8,046.42. The Standard & Poor's 500 Index .SPX shot up 47.59 points, or 6.32 percent, at 800.03. The Nasdaq Composite Index .IXIC climbed 68.23 points, or 5.18 percent, to 1,384.35.

The S&P financial index .GSPF, which had been down as much as 7.3 percent earlier in day as worries about the future of Citigroup dragged on the sector, reversed course after the Geithner news to end up 3.4 percent.

Climbing energy companies also boosted the market as the price of oil rose from a three-and-a-half-year low. Exxon Mobil (XOM.N) jumped more than 10 percent.

For the week, the Dow lost 5.3 percent, the S&P 500 fell 8.4 percent, and the Nasdaq lost 8.8 percent. Friday’s gains made it the best day in just over a week.

Investors found the news on Geithner compelling enough to set aside the uncertainty surrounding the fates of U.S. banking icon Citigroup (C.N) and automotive companies General Motors (GM.N) and Ford (F.N).

<p>Traders work at the station trading Citigroup stock on the main trading floor of the New York Stock Exchange in New York City, November 21, 2008. REUTERS/Mike Segar</p>

In a choppy day, markets vacillated between negative and positive territory, alternately weighed by jitters over the outlook for financials and the economy, but lifted as investors scoured the markets for bargains.

U.S. front month crude rose 51 cents to $49.93 a barrel. Exxon Mobil (XOM.N) was the biggest boost for the Dow, gaining 10.7 percent to $75.81. An S&P index of energy companies .GSPE jumped 11.7 percent.

But Citigroup remained a weight on the markets, falling 20 percent to $3.77, following news reports that the company is considering selling pieces of its business or the entire company outright.

Citigroup Chief Executive Vikram Pandit tried to downplay speculation that the bank might sell major businesses. Pandit told employees that the company does not want to change its business model, according to two people who heard him.

<p>Traders work at the station trading Citigroup stock on the main trading floor of the New York Stock Exchange in New York City, November 21, 2008. REUTERS/Mike Segar</p>

Besides Citigroup, shares of JPMorgan (JPM.N) declined 2.8 percent to $22.72.

Among gainers, Bank of America (BAC.N) rose 2 percent to $11.47.

The failure of U.S. automakers, including General Motors Corp (GM.N), to secure an immediate government bailout to avert possible bankruptcy lingered, although GM and Ford recovered from earlier losses to close up 6.3 percent at $3.06, and 2.9 percent to $1.43, respectively.

Wal-Mart Stores Inc (WMT.N) rose 4.5 percent to $52.92 after the world’s largest retailer said Lee Scott was retiring as chief executive and it named Mike Duke, who heads Wal-Mart’s international operations, as his successor.

Microsoft (MSFT.O) jumped 12.3 percent to $19.68, after Oppenheimer upgraded the Dow component to “outperform.”

Trading was heavy on the New York Stock Exchange, with about 2.37 billion shares changing hands, above last year’s estimated daily average of roughly 1.9 billion, while on Nasdaq, about 3.08 billion shares traded, above last year’s daily average of 2.17 billion.

Advancing stocks outnumbered declining ones on the NYSE by 2,027 to 1,161, while advancers beat decliners on the Nasdaq by about 1,670 to 1,115.

Additional reporting by Rodrigo Campos; Editing by Leslie Adler

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