NEW YORK (CNN/Money) - A warning from American Express could put a damper on investor optimism early Wednesday following an upbeat profit forecast from Procter & Gamble and an unprecedented 11th interest rate cut this year by the Federal Reserve.
At 8:45 a.m. ET, the Nasdaq-100 and the Standard & Poor's 500 futures hinted at a higher open for stocks..
Dow component American Express (AXP: Research, Estimates) said it is cutting 5,000 to 6,500 jobs and warned that its fourth-quarter profit will be lower than expected. American Express shares gained 26 cents to $34.26 Tuesday.
The Fed lowered interest rates a quarter percentage point Tuesday, cutting the target for the federal funds rate to 1.75 percent from 2 percent, bringing the rate that banks charge each other for overnight loans down to its lowest level in 40 years.
What's more, in its accompanying statement the Fed indicated the economy remains at risk, hinting that further rate cuts could be on the horizon.
Markets reacted favorably to the news. But a profit warning from drug-maker Merck (MRK: Research, Estimates) stunted the rally. The Dow fell 33.08 points to 9,888.37 following Merck's warning. The Nasdaq composite index, however, gained 9.81 to end the session at 2,001.93. The Standard & Poor's 500 shed 3.17 to 1,136.76.
Merck shares gained 30 cents to $61 in before-hours trading Wednesday.
Nevertheless, positive news after the bell Tuesday from Procter & Gamble on second-quarter earnings helped restore some optimism. The diversified consumer products company said it expects earnings to be 2 to 3 cents per share higher than current Wall Street forecasts. Procter & Gamble shares lost 2 cents to $76.70 Tuesday.
In another reading of the state of the economy, the U.S. current account trade deficit for the third quarter, the broadest measure of foreign trade, fell to $94.98 billion, the smallest in nearly two years, reflecting a recessionary strain on the economy. The Commerce Department said the deficit in the current account dropped by 11.7 percent from an April-June imbalance of $107.58 billion.
Asian markets rallied Wednesday after Japan's quarterly tankan survey, a key economic outlook gauge, came in stronger than expected. Europe's major bourses edged higher on the strength of Tuesday's Fed cut.
Treasury markets were higher in early trading Wednesday, with the yield on the 10-year note down to 5.01 percent from 5.05 percent Tuesday. The dollar slipped against the euro and the yen Wednesday. Brent oil futures rose 18 cents to $18.30 a barrel in London.
In other corporate news, Computer maker Dell (DELL: Research, Estimates) is being sued for patent infringement for allegedly installing technology in its computers without having a license to do so. The suit was initiated by six owners of the patents related to video data compression. The plaintiffs, who own a combined 44 patents, are France Telecom, Mitsubishi Electric, Scientific-Atlanta (SFA: Research, Estimates), Sony, U.S. Philips Corp. and Japan Victor Co. Dell shares gained 15 cents to $29.06 in trading Tuesday.
R.J. Reynolds Tobacco Holdings (RJR: Research, Estimates) won the battle to acquire Santa Fe Natural Tobacco, a small player with an affluent following, announcing a definitive agreement to buy the firm for $340 million cash. Reynolds shares rose 3 cents to $56.85 Wednesday.
J.P. Morgan Chase (JPM: Research, Estimates), one of Enron's (ENE: Research, Estimates) biggest creditors, filed a $2.1 billion lawsuit against the beleaguered energy trader Tuesday in a move to protect some of its loans. Meanwhile, the first congressional hearing into the collapse of Enron gets underway Wednesday with testimony from auditors of the former energy trading firm. Enron shares lost 9 cents to 72 cents Tuesday. 
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