By Medha Singh and Bansari Mayur Kamdar
(Reuters) – Shares Union Pacific Corp (NYSE:) and Southern Norfolk The New York Stock Exchange (NYSE::) rose on Thursday after major US rail companies reached an initial deal with unions to improve wages and working conditions, narrowly avoiding rail closures.
The two sides reached the agreement after 20 hours of intense talks brokered by the Biden administration. A person familiar with the talks told Reuters the deal now goes to unions for a vote.
Union Pacific and Norfolk Southern shares were up about 2% each, lifting the Dow Jones Transport Index 0.2%. The widest was flat.
Even if the unions rejected the proposal, the rail shutdown that would have occurred as soon as midnight Friday has been avoided for several weeks. The shutdown could have cost the US economy $2 billion a day and disrupted food and fuel supplies across the country.
said Andre Bacchus, managing director of Ingenium Analytics LLC in Plainsboro, New Jersey.
Negotiations between railroads including Union Pacific, Berkshire Hathaway (NYSE:), BNSF, CSX, Norfolk Southern, Kansas City Southern (NYSE:) and dozens of unions spanned more than two years.
The deal also provides some relief for investors already grappling with the impact of continued interest rate increases by the Federal Reserve to curb rising inflation.
Wall Street on Tuesday suffered its worst day in more than two years after a sharp inflation report in August fueled bets for more aggressive monetary tightening.
“Going deeper, many may have wondered what impact a strike might have on discussions of raising interest rates due to the potential impact on inflation,” said Danny Hewson, a financial analyst at AJ Bell.
CSX Corp (NASDAQ:) shares were down 2%. The company said CEO James Foote will retire this month and former Ford Motor Company (NYSE:) president Joe Heinrichs will replace him in the top position.
(This story corrects the company name to “Ingenium Analytics LLC” from “New Vines Capital LLC” in paragraph 5)