Rethinking the Fed

LONDON (CNNMoney.com) -- U.S. stocks looked set for a higher open Wednesday, as investors overcame their disappointment of the Federal Reserve's rate cut and focused on other moves the central bank may take to restore confidence in financial markets.

At 5:21 a.m. ET, Nasdaq and S&P futures were higher, pointing to a higher start for stocks.

The Fed's decision sank stocks on Tuesday. The Dow plummeted nearly 300 points after the central bank cut its key short-term interest rate by a quarter of a point, disappointing investors who had hoped for a half of a percentage point cut.

But according to a report in The Wall Street Journal, Fed officials are considering other tools to encourage lending among banks and could make a move in days. Possible action could include another reduction in the discount rate, the extension of longer-term loans to money-market dealers, as well as looser collateral rules for borrowing from the Fed, the report said.

While investors have been looking to the Fed to bail out the markets from the mortgage meltdown, there is a growing sense that monetary policy alone won't be enough to solve the current crisis. In a commentary piece published in the Journal, former Fed chairman Alan Greenspan said the current crisis will end when the glut of home inventories is cleared out and home prices start falling.

A number of economic reports are due, including readings on November import and export prices and the trade balance in October. Both of those releases are due at 8:30 a.m. ET.

Oil prices fell ahead of the U.S. government's weekly report on fuel inventories. Light, sweet crude for January delivery fell 36 cents to $89.63 a barrel in Asian electronic trading. The stockpiles report is on tap for 10:30 a.m. ET.

Among stocks to watch, Exxon Mobil (Charts, Fortune 500), the nation's largest oil company, said Tuesday it plans to build a floating liquefied natural gas terminal off the coast of New Jersey.

In global trade, major Asia markets retreated as investors expressed disappointment with the Fed's move. European stocks fell in early trading.