Markets higher on Treasury chief news

NEW YORK - Wall Street put a stop to a terrifying decline and stormed higher yesterday as President-elect Barack Obama appeared ready to tap the chief of the New York Federal Reserve as the next Treasury secretary and hand him the herculean task of righting the US financial system.

The Dow Jones industrial average, which was about even for the day until news of the nomination leaked about an hour before the close, raced upward and finished 494 points higher, a rally of 6.5 percent.

The outbreak of buying pushed the Dow above 8,000 - a figure that would have seemed like a nightmare three months ago but yesterday was a relief for Americans who have watched their investments and retirement savings drain away with alarming speed.

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.

The turnaround came when word reached Wall Street that Obama was likely to nominate New York Fed president Timothy Geithner, 47, for Treasury secretary. Geithner would assume top responsibility for tackling what threatens to be the deepest recession in a generation.

Financial markets despise uncertainty, and investors were looking for a clear message from Obama on who will make up his economic brain trust. Wall Street had been voicing increasing frustration with Henry Paulson, the current treasury secretary, over his erratic handling of the federal financial rescue system.

The S&P 500 jumped 47.59 to 800.03, and the Nasdaq Composite advanced 68.23 to 1,384.35.

The late afternoon rally managed to prevent the week from being one of the most dismal in Wall Street history. Corporate mainstays running the gamut from Gap Inc. to Alcoa Inc. and Walt Disney Co. to Microsoft Corp. surged by double-digit amounts.

But it did not erase heavy losses for the week. The Dow finished down about 5 percent for the five days, and other major averages suffered, too - 8 percent for the S&P 500, nearly 9 percent for the Nasdaq.