Wall Street worried over Fed

LONDON (CNNMoney.com) -- U.S. stock futures were weaker Monday as investors expressed uncertainty over how low the Federal Reserve will take short-term interest rates this week and braced for earnings from Wall Street's leading banks.

Traders are widely expecting Fed policymakers to cut rates when they meet Tuesday. A rate cut is expected to soothe some of the pain caused by the credit crunch, although investors may be disappointed if the Fed doesn't lower rates enough.

The market is expecting the Fed to reduce rates by at least a quarter-percentage point, but some are calling for the Fed to lower rates by as much as half a percentage point.

Investors are also gearing up for earnings from Wall Street brokerages, which have been slammed by the subprime mortgage meltdown and credit crisis. Lehman Brothers (Charts, Fortune 500) reports results on Tuesday and is followed by Morgan Stanley (Charts, Fortune 500) on Wednesday. Bear Stearns (Charts, Fortune 500) and Goldman Sachs (Charts, Fortune 500) post results on Thursday.

In major corporate news, a European Union court rejected Microsoft's appeal against a landmark ruling that found the software giant guilty of abusing its dominant market position. The court also upheld a $613 million fine that was levied by EU regulators. Shares of Microsoft (Charts, Fortune 500) fell about 2 percent in Frankfurt.

In global trade, stocks in Asia finished lower, and major markets in Europe fell in early trading.