Stocks moved into positive ground in mid-afternoon trading on Tuesday after the Federal Reserve cut the borrowing costs by a half percentage point in its tenth interest-rate reduction this year to lift the sluggish economy. 
The blue chip Dow Jones industrial average .DJI was up 5.47 points, or 0.06 percent, at 9,446.50. The broader Standard & Poor's 500 Index .SPX added 0.18 of a point, or 0.02 percent, at 1,103.02. The technology-laced Nasdaq Composite Index .IXIC rose 7.89 points, or 0.44 percent, to 1,801.54. 
The central bank cut rates by a half percentage point for the third time in less than two months after the Sept. 11 attacks leveled the World Trade Center and exacerbated the economy's woes. The reduction brings the federal funds overnight lending rate to 2.0 percent, its lowest level in four decades. 
Investors widely expect the economy to slip into recession this year, but they are betting a rebound is in the cards by 2002. Those hopes have supported stocks in the past few weeks amid a downpour of dismal economic data. The economy suffered its worst contraction in more than a decade in the third quarter, and job losses hit a two-decade high last month. 
"A lot of people were only expecting 25 basis points. We got the 50, so we got the market up," said Thomas Garcia, who helps manage $2.5 billion for Thornburg Asset Management. "Rate cuts are good for the overall economy because the cheaper it is to borrow, the more you're willing to do it. This expands the economy faster."