NEW YORK — The misery gripping the stock market lifted at least briefly Friday as share prices surged on word that President-elect Barack Obama had settled on a nominee for Treasury secretary.
After hovering near the break-even point for much of the trading session, stocks soared in the last hour on reports that Timothy F. Geithner, president of the Federal Reserve Bank of New York, would become Obama's top economic official.
Geithner has worked closely with major New York banks in his current post and is well liked and highly regarded on Wall Street, so his apparent selection was seen as a sign that Obama would place a high priority on helping the bloodied financial sector come out of its crisis.
"His selection is not by accident," said Peter Kenny, managing director at Knight Capital Group Inc. in Jersey City, N.J. "His geographic point of reference is of central significance."
Investors also were pleased that Obama was expected to announce the rest of his economic team early next week, suggesting his administration would be ready to address the financial meltdown immediately after his inauguration.
Although a nomination of Geithner won't by itself calm the tides that have battered the economy and the stock market, the perception of action Friday boosted badly depleted confidence, which is crucial to halting the stock slide, traders said.
The Dow vaulted 494.13 points, or 6.5%, to 8,046.42, erasing its 445-point plunge Thursday. But the blue-chip gauge still was down 5.3% for the week.
The Standard & Poor's 500 index, which fell to an 11-year low Thursday, rocketed 47.59 points, or 6.3%, to 800.03. The Nasdaq composite index advanced 68.23 points, or 5.2%, to 1,384.35.
The rally did not include beleaguered banking giant Citigroup, whose shares plunged for a third straight day on speculation that the company might have to dismantle itself or put itself up for sale.
"The market's saying, 'Break this thing up,' " said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Some of the parts are clearly worth more than the whole, and unfortunately [Chief Executive Vikram] Pandit doesn't have the luxury of time" to turn the firm around.
Even though Citigroup recently received a $25-billion capital infusion from the Treasury Department, some investors expect that the government will be forced to step in with some sort of rescue package.
