Stock rally may not have legs
Futures decline after dramatic surge on Wall Street; Morgan Stanley earnings on deck.
NEW YORK (CNNMoney.com) -- Stock futures declined early Wednesday, a day after a deep Federal Reserve rate cut helped fuel a dramatic rally on Wall Street.
About two hours before the start of trading, Nasdaq and S&P futures were lower, suggesting a weak open for stocks, although futures started moving closer to fair value following better-than-expected results from Morgan Stanley.
Stocks initially retreated, then 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%, while the S&P 500 and Nasdaq both gained more than 4%.
Nervousness isn't over. 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 government's weekly report on fuel supplies. Light, sweet crude for April delivery dropped 85 cents to $108.57 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 reported lower earnings that were still far better than forecasts. The results were similar to those of rivals Goldman Sachs (GS, Fortune 500) and Lehman Brothers (LEH, Fortune 500). Both saw shares post strong gains Tuesday after reporting lower earnings that still managed to top forecasts. Morgan Stanley shares also gained in pre-market trading immediately following the results.
Mortgage-finance firms Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) also are in the spotlight. The Office of Federal Housing Enterprise Oversight, the federal agency that regulates the two firms, is set to hold a press conference with both companies' chief executives Wednesday morning 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.
Visa takes the stage. Credit-card firm Visa (V) is due to make its trading debut after raising a record $17.9 billion when it priced its initial public offering Tuesday evening at $44 a share. The company's stock will trade on the New York Stock Exchange.
In global trade, Asian stocks rallied on the Fed's decision to slash interest rates. Major European markets opened modestly higher, then slipped into negative territory in morning trading. 
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