The late-afternoon rally ended another volatile week that saw stocks hit six-year lows.

Stocks erased about half of the steep losses from Wednesday and Thursday, as investors got an unexpected jolt of confidence after an NBC News report that President-elect Barack Obama planned to name New York Federal Reserve President Timothy Geithner as Treasury secretary.

Investors have been looking for a clear message from Obama on who will lead his economic brain trust as the country faces its biggest financial crisis since the Great Depression. Some on Wall Street have grown frustrated with outgoing Treasury Secretary Henry M. Paulson Jr. over his handling of the government's effort to rescue the banking system.

The advance in stocks also came as the FDIC said it would guarantee up to $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. The directors of the Federal Deposit Insurance Corp. voted yesterday to approve the plan, which is meant to break the logjam in bank-to-bank lending.

The Dow rose 494.13 points, or 6.54 percent, to settle at 8,046.42. The Standard & Poor's 500 index jumped 47.59, or 6.32 percent, to 800.03, and the Nasdaq composite advanced 68.23, or 5.18 percent, to 1,384.35.

The Russell 2000 index of smaller companies rose 21.23, or 5.51 percent, to 406.54.

Despite yesterday's gains, stocks are still down sharply for the week. The Dow has lost 5.31 percent, while the S&P 500 fell 8.39 percent and the Nasdaq lost 8.74 percent. Paper losses for the week in U.S. stocks came to $1 trillion, according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stocks traded in America.

While the uncertainty surrounding Obama's economic team has been removed, there are still plenty of unknowns facing the market.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said worries about marquee companies from General Motors Corp. to Citigroup Inc. were unnerving investors.

They have grown anxious this week that losses from souring debt will swamp banks, even those given financial support through the government's $700 billion rescue plan. Citigroup, in particular, is a concern for Wall Street because the company hasn't booked a profit in the last four quarters.

As the banking giant's shares slid below $4, analysts said yesterday that it might be forced to merge or sell some of its prized businesses. Shares closed down 94 cents, or nearly 20 percent, at $3.77.

Investors have also worried about the fate of GM, Ford Motor Co. and Chrysler L.L.C. The heads of the companies, warning that automakers are perilously low on cash, have been asking Washington for $25 billion in loans. But lawmakers have asked the automakers for detailed plans about how they would use the money. GM shares rose 18 cents, or 6.3 percent, to close at $3.06, while Ford rose 4 cents, or 2.9 percent, to $1.43. Chrysler is not a publicly traded company.

Light, sweet crude for January delivery rose 51 cents to settle at $49.93 a barrel on the New York Mercantile Exchange. The dollar fell against other major currencies, while gold prices rose.