Dow up on news of treasury boss

NEW YORK – Wall Street put a stop to a terrifying decline and stormed higher Friday 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 U.S. financial system.

The Dow Jones industrial average, which had broken 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 more than 6 1/2 percent.

An outbreak of buying Friday pushed the Dow above 8,000 – a figure that would have seemed like a nightmare three months ago but on Friday 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. The Friday afternoon rally managed to prevent the week from being one of the few 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.

The Dow finished at 8,046, and the S&P just a hair over 800.

But the S&P is still down 46 percent so far this year, the most since 1931. And there was still plenty to be concerned about. Citigroup stock took another huge hit – down 20 percent of what’s left of its value, to close at $3.77 – as pressure built on the bank to sell part or all of itself.

The Dow Jones industrial average ended the week down down 450.89, or 5.31 percent, at 8,046.42. The Standard & Poor’s 500 index finished down 73.26, or 8.39 percent, at 800.03. The Nasdaq composite index ended the week down 132.50, or 8.74 percent, at 1,384.35.

The Russell 2000 index finished the week down 49.98, or 10.95 percent, at 406.54.

The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S. based companies – ended at 7,926.05, down 795.83 points, or 9.12 percent, for the week. A year ago, the index was at 14,288.29.