WASHINGTON (Jan. 3, 2001)—The Federal Reserve Board, in a surprise move today, reduced key short-term interest rate by one-half percentage point, citing the economic slowdown and "tight conditions" in financial markets. The surprise move came four weeks before policy makers were to meet.
Stock prices rose immediately after the Fed´s move offered some relief from worries about company earnings and the economy. The previously hard-hit Nasdaq composite index closed the day more than 14 percent higher at 2616.52. Meanwhile, the S&P 500 rose 5 percent to 1347.46 and the Dow industrial averages surged by 2.81 percent to 10945.75.
Tire company stocks were among those affected. Goodyear stock closed at $23.72, up $1 or 4.4 percent. Cooper Tire & Rubber Co. shares also rose slightly more than 6 percent to close at $11.88.