Wall Street ready for big open

Futures point to a sharply higher start after Paulson, Bernanke seek to soothe investors with another bailout.

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By Aaron Smith, CNNMoney.com staff writer

How would you rate the government's response this week to the credit crisis?
  • Appropriate
  • Not doing enough
  • Overreacting

NEW YORK (CNNMoney.com) -- Stock futures surged Friday following news that the federal government is working on a plan to help take the bulk of the credit crunch burden off banks.

At 9 a.m. ET, Nasdaq and S&P futures were sharply higher, indicating an upbeat start for Wall Street, as a wild week of big stock moves comes to a close.

The troubled finance sector made a resurgence in pre-market trading, with Morgan Stanley (MS, Fortune 500) up 51%, Goldman Sachs (GS, Fortune 500) up 35% and Washington Mutual (WM, Fortune 500) up 61%.

Late Thursday, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told Congressional leaders that they are ready to establish a program that would let banks get rid of mortgage-related assets that are hard to value and harder to trade.

The Treasury Department said Friday it would insure money market mutual funds for finance firms that pay a fee to participate in this temporary program.

Also lifting futures was an announcement by the Securities and Exchange Commission that it was halting short-selling in financial firms to try and help restore confidence in the markets.

Art Hogan, chief market strategist for Jefferies & Co., said the short-selling ban is a good short-term plan for helping the hard-hit finance companies pull out of their slump, while the plan for getting rid of mortgage-related assets is good for the markets on a long-term basis.

"The longer-term plan is sort of a central clearing house where [the banks and finance firms] can clear some of the bad debt that's hard to trade," said Hogan. "That's really been a drag on the market."

"Whether it's tangible or emotional, we're getting markets back up to where they should be," he added.

On Thursday, stocks staged a late-session rally, with the Dow surging 410 points, or 3.9%, as speculation about the government bailout swirled.

Stocks to watch include Oracle (ORCL, Fortune 500), which reported better-than-expected quarterly results and raised its outlook.

Other markets: European markets were up sharply, and Asian markets ended higher. The U.S. dollar was down versus the euro and the British pound but rose against the yen. Oil prices rose $2.31 to $100.19. To top of page

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