Stocks Vaulted Higher by Afternoon Rally

Updated from 1:03 p.m. EST

As is perfectly normal these days on Wall Street, stocks traded in a wide band before surging ahead late in the session Friday, a rally that coincided with reports that New York Federal Reserve leader Tim Geithner is likely to be nominated as the next secretary of the Treasury.

During the final hour of trading, the Dow Jones Industrial Average skyrocketed to close up 494.13 points, or 6.5%, at 8046.42. The S&P 500 added 47.59 points, or 6.3%, to 800.03, and the Nasdaq gained 68.23 points, or 5.2%, at 1384.35.

As the markets continued to process the likelihood of a severe economic downturn, NBC News reported that President-elect Barack Obama will on Monday name Geithner as his choice to run the Treasury Department.

"I'm very, very pleased," said Paul Mendelsohn, chief investment strategist at Windham Financial. He said that the New York Fed has provided Geithner excellent preparation to head the Treasury. "Put him together with [Fed Chairman Ben] Bernanke, and you really have two monetary experts there."

Mendelsohn said that the news of Geithner's selection was also well-timed, coming on an options-expiration Friday, when market moves can be extended by high volume and volatility. "It's almost like [Obama] knows," he said. "I'm just happy this week is over. Maybe things can get back to a little bit of normal."

James Paulsen, chief investment strategist for Wells Capital Mangement, said he was hoping Geithner would be a calmer presence. "[The selection] just means that we've got new leaders, and that's going to be good, at least for a while."