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Wall Street closes on reassuring upswing

Text by AFP

Latest update : 2008-11-21

After a day of worrisome fluctuations, the Dow closed at +6.59%, with an overall upswing of 500 points for the week.

Wall Street staged a strong late rally Friday as traders cheered reports New York Federal Reserve chief Timothy Geithner would be named the next Treasury secretary by president-elect Barack Obama.

The Dow Jones Industrial Average vaulted 494.13 points (6.54 percent) to close at 8,046.42, ending the week on a positive note after two days of brutal selling that erased some 10 percent from the main indexes.

The Nasdaq composite climbed 66.23 points (5.18 percent) to 1,384.35 and the Standard & Poor's 500 index jumped 47.59 points (6.32 percent) to end at 800.03.

Buyers became energized in the final hour after a report by NBC News that Obama will personally unveil Geithner as the incoming Treasury boss at a news conference on Monday, along with other members of his economic team.

The report by NBC's Andrea Mitchell, who is married to former Fed chairman Alan Greenspan, cheered depressed investors, even though there was no immediate confirmation.

"The market is running up on the news that Timothy Geithner will be the next treasury secretary," said Peter Cardillo of Avalon Partners.

"Maybe it can bring confidence back."

Augustine Faucher at called Geithner "an excellent choice for the post, given his background and work tackling the financial crisis."

Faucher added, "With the continued turmoil in financial markets, Obama is moving quickly to put his economic team in place, so it can start to work immediately after his inauguration on January 20."

Geithner, 47, has been on the front lines of the US central bank's battle to shore up the markets by overseeing its intervention operations from his berth at the New York Fed.

He was a career official at the Treasury Department from 1988 to 2001, serving under three administrations and rising to undersecretary for international affairs.

As the successor to Henry Paulson, Geithner would become the overseer of a 700-billion-dollar bailout package for distressed banks at a time when the world's largest economy is staring at recession.

The market action came after the Dow and Nasdaq fell Thursday to their lowest closing levels since 2003 and the S&P tumbled to an 11-year low amid fears of a deepening global economic crisis, prompting a frenzied rush into US Treasury bonds.

Despite the rebound for the main indexes, the financial sector faced more intense pressure.

Citigoup, which has been battered all week, fell another 19 percent to 3.77 dollars after the Wall Street Journal reported the board of the banking giant would meet to consider a sale of all or part of the company.

JPMorgan Chase slumped 2.3 percent to 22.85 and Wells Fargo lost 3.1 percent to 21.84 dollars.

Wal-Mart rallied 4.5 percent to 52.92 as the deep discount retailer and sector leader said it was replacing chief executive Lee Scott in February with international division chief Mike Duke.

The bond market was mixed a day after yields hit historic lows on a rush to safety. The yield on the 10-year US Treasury bond increased to 3.167 percent from 3.144 percent Thursday and that on the 30-year bond dipped to 3.663 percent after 3.699 percent. Bond yields and prices move in opposite directions.


Date created : 2008-11-21