WASHINGTON — Hillary Rodham Clinton has decided to give up her Senate seat to become secretary of state in the Obama administration, making her the public face to the world for the man who dashed her hopes for the presidency, confidants of Clinton said Friday.
For the pivotal post of Treasury secretary, President-elect Barack Obama will name Timothy Geithner, president of the Federal Reserve Bank of New York, people briefed about the decision said.
The move comes as quavering financial markets are looking for reassurance about the direction of economic policy. Word of Geithner's selection helped drive stocks sharply higher on Friday as the Dow Jones Industrial Average closed up 494 points, a 6.5 percent gain after days of dizzying declines.
People close to Obama said that he clicked with Geithner during a recent private meeting. The two men are the same age, 47, and Obama is close temperamentally to the low-key and almost boyish Geithner.
With Clinton as secretary of state and retired Marine Gen. James Jones emerging as a front-runner for national security adviser, Obama appears intent on naming an experienced and centrist foreign policy team.
In recruiting Clinton, Obama chose to turn a rival into a partner, and she concluded that she could have a greater impact by accepting the post than by remaining in the Senate.
Her selection is still to be formalized and will not be announced until after Thanksgiving. It would be yet another direction in the unlikely journey of a onetime political spouse in Arkansas who went on to build a political base of her own and become a symbol of achievement to many women.
The sometimes awkward dance between Obama and Clinton in the eight days since he invited her to a meeting culminated in a telephone call Thursday.
Before the call, Clinton was skeptical about the prospect of joining the Cabinet, her confidants, who insisted on anonymity to discuss the situation, told the New York Times. But Obama addressed her concerns about access, personnel and other issues, leading her to conclude she should take the job, they said. "She's ready," one said.
Obama's advisers said although no offer had been formally accepted, her nomination was "on track" and would probably be announced after the holiday.
Several sources told the Washington Post that Jones has moved to the top of the list to be national security adviser and that Obama is considering expanding the scope to give the adviser the kind of authority once wielded by figures such as Henry Kissinger.
Jones, a former Marine commandant and NATO supreme commander, would be a formidable counterweight to Clinton. He would be in charge of managing an interagency process that many Democratic foreign policy experts say has been broken under the Bush administration.
Obama was still trying to decide whether to keep Defense Secretary Robert Gates on an interim basis or install another choice to run the Pentagon right away.
The emerging national security team appears to be centrist in orientation, with deep experience in many areas likely to be the focus of Obama's foreign policy — including wars in Iraq and Afghanistan and instability in Pakistan and the Middle East, where Obama advisers have been signaling a desire to make an early mark in the stalled peace process.
While there has been much discussion about the president-elect's purported interest in creating a "team of rivals" in his Cabinet, the emerging group could also be one that works well together. Gates is widely known for being a nonpartisan, congenial manager, while Jones is considered by many who know him to be a self-effacing general who "wears power very gracefully," as one put it.
One wild card would be Clinton, who clashed sharply with Obama over foreign policy during their battle for the Democratic presidential nomination but worked hard for the party's ticket in the fall.
The choice of Clinton pleased many in the Democratic establishment who admire her strength and skills, and they praised Obama for putting the rancor of the campaign behind him.