Stocks Zoom Out of the Opening Gate - TheStreet

Updated from 9:00 a.m. EDT

U.S. stocks roared higher Friday following reports that the government was creating a sweeping fix for the financial crisis. Further support came in the form of a moratorium on short-selling by the

Securities and Exchange Commission

.

The

Dow Jones Industrial Average

jumped 238 points to 11,258, and the

S&P 500

gained 36 points to 1243. The

Nasdaq

added 111 points to 2310.

Financial stocks were off to the races. Names including

Washington Mutual

(WM) - Get Report

,

Wachovia

(WB) - Get Report

,

Citigroup

(C) - Get Report

and

Morgan Stanley

(MS) - Get Report

were all showing sizable double-digit gains.

During Thursday's volatile session, the major indices swung back and forth before rallying sharply in the afternoon. The

Dow Jones Industrial Average

traded in a 617-point range before gaining 410 points, or 3.9%. The S&P 500 and Nasdaq added 4.3% and 4.8%, respectively.

The late gains came on a

CNBC

report that the Treasury Department was formulating an entity that would remove bad debt from companies' balance sheets. The plan includes a possible $800 billion fund to buy bad debt from troubled financial firms.

Early Friday, the Treasury said it would offer $50 billion from its Exchange Stabilization Fund to insure

money-market

mutual funds. A number of such funds have lately been under fire thanks to investment in bad debt from bankrupt

Lehman Brothers

and flailing insurer

AIG

(AIG) - Get Report

.

The

Federal Reserve

also said it would build on its liquidity programs to assist money-market funds, by taking steps that include buying short-term debt issued by

Fannie Mae

(FNM)

,

Freddie Mac

(FRE)

and the

Federal Home Loan Banks

.

Treasury Secretary Henry Paulson is slated to hold a press conference at 10 a.m. EDT to discuss the Treasury's role in the markets.

The SEC, meanwhile,

banned short-selling

of 799 financial stocks, effective immediately. The temporary crackdown will remain in place until Oct. 2 but may be extended further. The U.K.'s financial regulator also banned short sales of 29 of its publicly traded companies. Short-selling, or making a bet that a given stock's price will fall, has been a source of heated controversy as some have speculated that short-sellers are responsible for the decline of

Bear Stearns

and

Lehman Brothers

.

Elsewhere in the financials space, AIG said

Edward Liddy

will succeed Robert Willumstad as chairman and CEO. Willumstad was ousted by Treasury Secretary Henry Paulson as part of a government bailout package for AIG.

Stocks were further buoyed by decent earnings statements in the technology sector. After Thursday's session closed,

software maker Oracle

(ORCL) - Get Report

reported rising fiscal first-quarter profits but offered cautious revenue guidance.

Mobile device maker

Palm

(PALM)

posted a wider first-quarter loss but still bested Wall Street's estimates.

Looking at commodities, oil was gaining $1.52 to $99.40 a barrel. Gold was giving back $35.90 to $861.10 an ounce after surging more than $110 in the previous two days.

Longer-dated U.S. Treasury securities were declining in price. The 10-year was down 2 points to yield 3.78%, and the 30-year was off 2-16/32, yielding 4.33%. The dollar was making substantial gains on its major foreign competitors.

Overseas, the FTSE in London was up 8.5%, and the DAX in Frankfurt was gaining 4.9%.

Asia stocks

went on a tear. The Nikkei in Japan closed with a gain of 3.8%, and the Hang Seng in Hong Kong jumped 9.6%.