U.S. stocks set for a strong start

NEW YORK (CNNMoney.com) -- U.S. stocks were headed for a higher open Wednesday, following a global selloff, as optimism over earnings outweighed concerns about Greece ahead of a key statement from the Federal Reserve.

Dow Jones industrial average, S&P 500 futures and Nasdaq 100 futures were higher.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins.

U.S. stocks fell sharply Tuesday after Standard & Poor's cut Greece's debt rating to junk and downgraded Portugal's rating. The Dow sank 213 points, or 1.9%, and the S&P plunged 2.3%. The tech-heavy Nasdaq dived 2%.

"Good earnings have turned the futures around," said Peter Cardillo, chief market economist for Avalon Partners, referring to the premarket slump that happened earlier in the morning.

Cardillo said concerns about "the meltdown in global markets" have been offset by stronger-than-expected corporate results, particularly from Dow Chemica, and speculation that the Fed will issue an upbeat economic outlook.

Earnings: Dow Chemical (DOW, Fortune 500) reported earnings of 41 cents per share, coming in well ahead of the 30 cents EPS that was expected by a consensus of analyst opinion from Thomson Reuters.

Dow reported that sales surged 48% in the first quarter compared to the year-ago quarter.

AOL (AOL) reported diluted earnings of 32 cents per share for the first quarter, coming nowhere near the Thomson Reuters analyst consensus forecast of 70 cents. The Internet company said it significantly reduced operating expenses, though revenue fell nearly 20% compared to the year-ago quarter.

General Dynamics (GD, Fortune 500) reported first-quarter earnings of $1.54 per share, topping the $1.51 that had been forecast by Thomson Reuters consensus. (See correction below)

World markets: Asian shares took a cue from Wall Street overnight and finished the session in negative territory.

Japan's benchmark Nikkei index lost 2.6% and the Hang Seng in Hong Kong closed 1.4% lower. The Shanghai Composite declined 0.3%.

The downbeat sentiment carried over to Europe, where France's CAC 40 and the DAX in Germany both fell 1.6% in active trading. But Britain's FTSE 100 managed to edge into positive territory.

Greece: Investors are fearful that Greece's problem is not being contained and that a European debt crisis will drag on the worldwide economic recovery.

The yield on Greek bonds surged Tuesday to the highest levels since the introduction of the euro in 2002 after S&P lowered Greece's debt to junk status.

The 10-year note yielded 11.24% on Wednesday, reaching its highest point since the introduction of the euro in 2002.

Greece is facing a May 19 deadline for refinancing about $11.4 billion in borrowings. The debt-laden country last week formally requested $53 billion in combined loans from the European Union and International Monetary Fund.

But there are concerns the aid package may be insufficient. Reports Wednesday said the IMF may is considering a plan to offer Greece an additional about $13 billion.

"Basically the markets are going to force the EU and IMF to take action sooner than anticipated," said Cardillo. "As the crisis intensifies, we might see a quicker resolution on Greece in the hopes of preventing the problem from spreading."

Fed: U.S. investors will be looking to the Federal Reserve for direction Wednesday. Following its two-day meeting, the central bank will release its policy statement at 2:15 a.m. ET.

The Fed is widely expected to keep interest rates at historical lows near zero, but as usual, investors will scrutinize anything policymakers have to say about the economic outlook and the central bank's plans for tightening its accommodative policy.

"I think we'll get a better economic picture from the Fed," Cardillo said. "They won't raise rates, but they may modify their language to prepare the market for the idea that easy money is a thing of the past."

Other markets: Concerns about a euro zone debt crisis helped the dollar. On Tuesday the dollar climbed 1.5% against the euro, which was at $1.3176 .

The price of oil fell 6 cents to $82.38 per barrel. The government's weekly crude oil inventory report was due after the market opens.

Gold prices rose $3 to $1,165.20 an ounce.

Bond prices fell, with the yield on the 10-year U.S. Treasury note at 3.73%. The government is planning to auction $42 billion in 5-year notes Wednesday and $32 billion in 7-year notes Thursday.

--An earlier version gave an erroneous estimate of General Dynamics' results.