Stocks swell ahead

NEW YORK (CNNMoney.com) -- Stocks rallied at the start of trading Wednesday as talk of further interest rate cuts grew.

The Dow Jones industrial average gained 0.7 percent. The Nasdaq composite index surged 1.1 percent. The Standard & Poor's 500 index was 0.7 percent higher.

Among stocks in the news Wednesday: Wal-Mart Stores (Charts, Fortune 500), General Electric (Charts, Fortune 500), Home Depot (Charts, Fortune 500), Fannie Mae (Charts), DSW (Charts) and Western Digital (Charts, Fortune 500).

OPEC members decided to keep output steady at a meeting in Abu Dhabi, saying that market fundamentals and global supplies did not justify increased production, although the oil cartel announced it would meet again in February to consider the issue again.

Oil prices shot up $1.49 to $89.81 in electronic trading on the news. Prices had fallen from a record high near $100 a barrel to under $90 in the last week on hopes of a production increase from the oil cartel.

There's a slew of second-tier economic reports due Wednesday, including readings on factory orders and service sector growth from the Institute of Supply Management.

Stocks in the news included Fannie Mae (Charts), which slashed its dividend after the market close Tuesday and said it would offer $7 billion of stock after getting slammed by the mortgage crisis. Shares of the battered mortgage lender were off 1.5 percent in pre-market trading.

The New York state attorney general's office is looking into how several Wall Street firms packaged and sold subprime mortgage debt, according to the Wall Street Journal. The newspaper said prosecutors sent subpoenas to Merrill Lynch (Charts, Fortune 500), Bear Stearns (Charts, Fortune 500) and Deutsche Bank. Both Merrill and Bear Stearns shares gained in pre-market trading after sharp declines Tuesday, while Deutsche Bank (Charts) shares were up modestly in Frankfurt trading.

Retailer Home Depot (Charts, Fortune 500), a Dow component, saw its shares up nearly 1 percent in pre-market trading after it announced cost cutting moves, saying it would eliminate nearly 1,000 jobs and close three call centers.

In global trade, major markets in Asia finished the session higher. European stocks rose in midday trading.