Stock rally may not have legs

Futures decline after dramatic surge on Wall Street; Morgan Stanley earnings on deck.

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LONDON(CNNMoney.com) -- U.S. stock futures declined early Wednesday, a day after a deep Federal Reserve rate cut helped fuel a dramatic rally on Wall Street.

At 4:56 a.m. ET, Nasdaq and S&P futures were lower, suggesting a weak open for stocks.

Stocks surged Tuesday after the Fed cut short-term interest rates by three-quarters of a percentage point. The Dow spiked 420 points, or about 3.5%.

But jitters about the credit crisis and mortgage mess, which have pummeled stocks recently, may keep investors on edge.

Oil prices fell ahead of the U.S. government's weekly report on fuel supplies. Light, sweet crude for April delivery dropped 78 cents to $108.64 a barrel in early electronic trading. The inventory report is due at 10:30 a.m. ET.

Companies to watch include Morgan Stanley (MS, Fortune 500), which is due to report earnings before the market open. Rivals Goldman Sachs (GS, Fortune 500) and Lehman Brothers (LEH, Fortune 500) both reported better-than-expected quarterly results on Tuesday.

Mortgage-finance firms Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) also are in the spotlight. The government is expected to announce a plan to ease capital requirements on the two firms. Such a move would free up money for Fannie and Freddie to provide for housing loans.

Credit-card firm Visa is due to make its trading debut after raising a staggering $17.9 billion when it priced its initial public offering Tuesday evening. The company will trade under the ticker "V" on the New York Stock Exchange

In global trade, Asian stocks rallied on the Fed's decision to slash interest rates. European markets were mixed in early trading. To top of page

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