(The Associated Press circulated the following on December 16.)
NEW YORK — Shares of rails and trucks held their gains Tuesday as the Federal Reserve slashed a key interest rate to its lowest point ever in an effort to prevent the recession from deepening.
The Fed cut the federal funds rate _ the interest rate banks charge each other on overnight loans _ to a range of zero to 0.25 percent. The rate had been at 1 percent since Oct. 29. Most analysts expected a half-point cut to 0.50 percent.
The target rate is now at its lowest point ever, according to records that track the monthly average of the funds rate going back to 1954. And although the key rate has now fallen into uncharted waters, Fed Chairman Ben Bernanke has assured the Fed is also considering other tools, not just rate cuts, to spur the economy.
Any improvement in economic activity would spur demand for railroads and trucking companies, which are suffering from deteriorating demand. Both are considered bellwethers for the U.S. economy because they haul virtually all the retail goods in the country.
In trading after the announcement, railroad Union Pacific Corp. gained $2.62, or 6 percent, to $46.10, while Burlington Northern Santa Fe Corp. added $2.58, or 3.6 percent, to $74.11.
Trucking company Werner Enterprises Inc. rose 57 cents, or 3.6 percent, to $16.21 and Arkansas Best Corp. rose 96 cents, or 4.2 percent, to $23.91.