(RTTNews) - Wall Street is looking to open Friday’s session with a massive rally as investors react to several government initiatives to help stabilize the weakness in the financial markets. The strength comes after stocks saw a late day rally on Thursday that led the Dow up more than 400 points.

The main U.S. securities regulator announced Friday that it has temporarily banned short selling in certain financial stocks in order to provide stability to the markets after the turmoil of the past couple days.

The Securities and Exchange Commission said the temporary emergency action, which it called a “time-out to aggressive short selling in financial institution stocks,” would apply to the securities of 799 financial companies and will take effect immediately. The announcement follows a similar rule put in place by U.K. securities regulators on Thursday.

Earlier this week, the SEC announced beefed up rules to fight “naked” short selling, a practice that allows traders to take unfair advantage of vulnerable stocks.

At the same time the Treasury Department announced that it has established a temporary guaranty program for the U.S. money market mutual fund industry. Under the program, which will last for the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund.

In explaining the need for the program, the Treasury said, “Maintaining confidence in the money market fund industry is critical to protecting the integrity and stability of the global financial system.”

Financial stocks are looking to open higher amid the new programs to stymie the freefall. Wachovia (WB), Washington Mutual (WM), Goldman Sachs (GS) and Morgan Stanley (MS) are among the financials that may see notable gains.

In other news, Oracle (ORCL) is giving the tech sector a boost after the company reported first quarter earnings after the closing bell on Thursday. Oracle said that its first quarter earnings rose 28 percent from last year, helped by strong sales of new software licenses and higher revenues from software license updates. Excluding items, the company’s quarterly earnings per share also came in above analysts’ expectations.

The markets staged a late day rally on Thursday, sending the Dow up more than 400 points. A report that the government may create a repository for bank’s bad debt prompted investors to take back nearly all of the losses posted in the previous session, when the Dow closed down more than 450 points.

Early in the day on Thursday, the Fed provided an extra $180 billion to the other central banks involved via its temporary reciprocal currency arrangements or swap lines, valid through January 30, 2009. This increased capacity is intended to provide dollar funding for both term and overnight liquidity operations by the other central banks.

The late day rally followed a CNBC report that suggested the Federal government might create a repository for banks’ bad debt, similar to the Resolution Trust Corporation that was formed in the 1980s after the failure of the savings and loan banks.

The major averages moved sharply higher in the final hour of trading, ended the day just off of their session highs. The Dow closed up 3.9 percent, the Nasdaq closed up 4.8 percent and the S&P 500 closed up 4.3 percent.

Among individual stocks, ImClone Systems (IMCL) may see notable gains on Friday after the company announced the commercial launch of a cancer drug in Japan. ImClone Systems announced that ERBITUX has been commercially launched in Japan for use in treating patients with advanced or metastatic colorectal cancer.

On the other hand, Palm (PALM) may see substantial weakness early on after the company reported a wider net loss for the first quarter compared to last year, as gross profit fell due to the increased cost of revenue.

Crude oil futures are rising $1.51 to $99.39 a barrel after rising $0.72 to $97.88 a barrel on Thursday. Gold futures are pulling back sharply and are trading down $35.70 at $861.30 an ounce. In the previous session, the precious metal surged up $46.50 to $897 an ounce.

On the currency front, the U.S. dollar is trading at yen 107.905 compared to the 105 yen it was worth at the close of New York trading on Thursday. Against the euro, the dollar is currently worth 1.4336.

In overseas trading, stock markets across the Asia-Pacific region rallied on Friday, mirroring Wall Street’s steep gains overnight. Japan’s Nikkei 225 index jumped 3.8 percent or 431 points to finish at 11,920.

The major European markets are also rallying, with the French CAC 40 and the German DAX Index rising 7.8 percent and 5.3 percent, respectively, while the U.K.’s FTSE 100 Index is advancing 8.9 percent.

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Posted in Categories: Eurozone, Japan, Releases, Stocks, USA.

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