Market Rally Spurred by Financials

Updated from 2:15 p.m. EST

Stocks in New York closed near their highs for the day, as early enthusiasm spurred by tech earnings and a rebound in the banks bloomed into a late-day rally.

The Dow Jones Industrial Average climbed 279 points to 8228, and the S&P 500 added 35 points to close at 840. The Nasdaq rose 66 points to 1507.

Citigroup(C Quote), Bank of America(BAC Quote) and JP Morgan(JPM Quote) reversed to help lead the Dow Wednesday after dragging the market to the worst inauguration day losses to date a day prior.

A few tech names helped to power the early turnaround: Notably, IBM (IBM Quote), which reported better-than-expected fourth-quarter profits, despite missing revenue estimates, and said full-year profit would exceed estimates as well.

Wall Street had one eye on the confirmation hearing of Timothy Geithner, President Obama's nominee for Treasury Secretary, as he called for aggressive action to handle the U.S. financial crisis.

"In this crisis, our financial system failed to meet its most basic obligations," said Geithner in his prepared remarks, describing the system as too unstable, fragile, unfair and unjust.

Geithner was questioned on his part and perception of government actions thus far, his plans, and also his failure to pay tens of thousands of dollars in taxes while an International Monetary Fund official.

"The basic lesson is the failure to appreciate early enough the magnitude of the problem, and the failure to move quickly enough to take the risk the private sector will not take," he said of the government's responsibilities in sustaining stability in financials. Geithner said the president will come before Congress and lay out a comprehensive plan to help stabilize the core of the financial system in the coming weeks.

"The biggest surprise is that it's clear that if there is a plan, he isn't willing to talk about it," said Fred Dickson, DA Davidson chief market analyst. "The Treasury team hasn't formulated the details of a plan yet -- he talks about bringing it back [to Congress] in a matter of weeks - but we're looking for something on a time frame of minutes and hours, not days and weeks."

As his first action as Chief Executive, President Obama signed an executive order on ethics that "presents a clean break from business as usual," placing limitations on lobbyists among other things. He's also establishing a new standard of openness through directives on how to interpret the Freedom of Information Act -- "perhaps the most powerful instrument we have of making government honest."

Moreover, President Obama has placed a salary freeze on senior executives, or those making more than $100,000 a year, in his administration, saying "During this period of economic emergency, families are tightening their belts and so should Washington."

As President Obama's team undertook day one of their mission to cure the ailing economy, Wall Street met Wednesday's open with renewed enthusiasm as stocks found upside in earnings for once.

In the headlines Wednesday, mark-to-market losses on investments led BlackRock(BLK Quote) to a profit of 40 cents a share for the recent quarter, vs. $2.43 a share a year prior, and well below expectations for $1.02 cents a share. Bank of America has a 49% stake in the asset manager through its acquisition of Merrill Lynch.

Among the tech items Wednesday, United Tech (UTX Quote) reported that its profit rose 8%, beating analyst estimates by a penny.

Telecommunications equipment maker Ericsson (ERIC Quote) also reported a better-than-expected fourth-quarter profit, although earnings retracted by 31%, and the Swedish company said it plans to cut 5,000 jobs.

Meanwhile, Sony (SNE Quote) reportedly plans to release the nuts and bolts of its restructuring plan Wednesday or Thursday, including where the 16,000 full-time and part-time job cuts will be made. Tensions are rising within the electronics company over the plan aimed at cutting billions of yen of costs, the Financial Times reports.

Longer-dated Treasuries were in retreat; the 10-year note was recently down 1 12/32 to yield 2.5%, the 30-year was down 3 26/32, yielding 3.2%.

In commodities, oil prices rose $3.15, to settle at $43.99 on the first day of the March contract.

Gold fell $5.10 to settle at $850.10 an ounce. The dollar was lately weaker against the euro and pound, and stronger vs. the yen.

Stocks overseas were mixed. The FTSE in London and the DAX in Frankfurt flirted with the flatline, after Japan's Nikkei Hong Kong's Hang Seng again ended with losses.