The iShares Dow Jones Transportation Average Index Fund (IYT) rallied 3.8% to $82.95.
The Federal Open Market Committee, the Fed's policy setting committee, is slated to make an announcement on interest rates at 2:15 p.m. Eastern. Expectations that the Fed may announce as much as a one percentage point cut in its target rate sparked a broad-based rally on Wall Street Tuesday, with the Dow Jones Industrial Average rallying nearly 300 points.
Shares of Overseas Shipholding, a bulk shipping company, led the advances, gaining 7.5% after Citigroup upgraded the stock to buy from sell and lifted its price target to $68 from $63.
"We believe that the stock is oversold at these levels and that even in an unfavorable rate environment [the company] would be able to generate a decent return," analyst John Kartsonas wrote to clients. "We expect the stock to outperform over the next six months."
Elsewhere in the sector, shares of railroad company CSX Corp. gained 5.1% to $53.92, a day after UBS upgraded the stock to buy from neutral. Union Pacific Corp. rose 3.4% to $126.28, and Burlington Northern Santa Fe added 2.2% to $93.16.
Fedex Corp. rallied 3.5% to $85.47 ahead of its third-quarter earnings on Thursday.
United Parcel Service Inc. added 2.2% to $71.14 and Ryder System Inc. advanced 4.3% to $61.10. Norfolk Southern Corp. traded up 4% at $55.07.
Wanfeng Zhou wz/vj
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