Wall Street opened with a roaring rally Friday after news that the U.S. government is creating a plan to rescue troubled banks from their souring debts.

Ahead of the market’s open Friday, Broader stock indicators also surged. The Standard & Poor’s 500 index rose 53.16, or 4.41 percent, to 1,259.67, and the Nasdaq composite index rose 98.81, or 4.49 percent, to 2,297.91.

The U.S. government plan to help the banking industry — which would be the largest bailout in American history — is alleviating investor uncertainty that has been sending the markets into tumult over the past week. Treasury Secretary Henry Paulson said late Thursday the rescue plan will need congressional approval; he came out of a nighttime meeting on Capitol Hill with Federal Reserve Chairman Ben Bernanke to say he hoped to have a solution "aimed right at the heart of this problem."

Paulson has a news conference scheduled for 10 AM. ET today on the plan. President Bush will discuss the economic situation later this morning, with Bernanke, Paulson and Securities and Exchange Commissioner Chris Cox.

The Washington Post reports that Paulson and Bernanke presented a "chilling" picture of the state of the financial system. Lawmakers were told that the consequences would be grave if they failed to pass legislation by the end of next week. Leaders committed to meeting that deadline.
In other financial news today:

-The Securities and Exchange Commission is temporarily banning the short selling — the practice of betting against company stocks by borrowing its shares, selling them and pocketing the difference when they fall — of 799 financial stocks. The UK Financial Services Authority made a similar move Thursday.

"The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," said Cox. "This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury and the Congress."

-The Treasury Department announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program. President Bush authorized the Treasury to tap up to $50 billion from a Depression-era fund to insure the holdings of eligible money market mutual funds. The Treasury has asked Congress to give it sweeping power to buy up toxic debt that has plagued Wall Street.

-Citigroup is considering making a bid for Washington Mutual, according to The Wall Street Journal. Sources said Citigroup and several other banks are reviewing the Seattle thrift-holding company’s books, which are packed with shaky mortgages. Other interested parties include Banco Santander SA of Spain and Wells Fargo of San Francisco. J.P. Morgan Chase may also be eyeing WaMu.