- The Washington Times - Saturday, November 22, 2008

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.

The outbreak of buying 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 Mr. Obama was likely to nominate New York Fed President Timothy Geithner, 47, for Treasury secretary. Mr. 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 Mr. Obama on who will make up his economic brain trust. Wall Street had been voicing increasing frustration with Henry M. Paulson Jr., the current Treasury secretary, over his erratic handling of the federal financial rescue.

“Something needed to be done on the economy,” said Ben Halliburton, chief investment officer at Tradition Capital Management. “The fact that they’ve got the team together, maybe that is going to shorten the period of indecision.”

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.

Investors have also worried about the fate of Detroit’s Big Three automakers, which are perilously low on cash and asking Washington for more help. The prospect of a bankruptcy filing by one or more of the companies has added to Wall Street’s worries about the state of the economy.

While a Geithner appointment could remove the cloud of uncertainty surrounding Mr. Obama’s economic team has been removed, there are still plenty of unknowns facing the market.

As a result, volatility will remain a major force on Wall Street for some time to come, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. He said worries about marquee companies from General Motors to Citigroup are unnerving investors.

“What we’re seeing is these symbols of American business history really suffering and prompting investors to call into question the viability of the system,” Mr. Ablin said.

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