Stocks were set for a selloff this morning as investors digested an impressive two-day, post-

Fed

-cut rally that has added to an already strong April. Earlier strength in futures trading -- boosted by enthusiasm over

Microsoft's

(MSFT) - Get Microsoft Corporation (MSFT) Report

earnings report -- faded as the morning wore on.

The big question for the day was: Do market participants want to take some profits off the table ahead of the weekend after heady gains have pushed the

Nasdaq Composite

up 33% since April 4, or would they prefer to see this bull charge right through today's session?

"We've had a huge runup here, so maybe investors are going in for a pullback," said Todd Clark, head of listed trading at

W.R. Hambrecht

.

Trading may be volatile and volume heavy today, as equity futures and options contracts expire.

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At 9:12 a.m.,

S&P 500 futures, which track the broad market, were down 6.1 points, about 7 below

fair value as calculated by

TheStreet.com

. Earlier up 26 points,

Nasdaq 100

futures, which track big-cap tech stocks, were down 16, about 29 points below fair value as calculated by

TheStreet.com

, indicating a moderate drop at the open. The thinly traded Dow futures were lately down 60 points. Fair value is usually a good gauge of how stocks will trade in early action.

Investors were celebrating Microsoft's

better-than-expected earnings numbers, released last night and bidding up the stock this morning. The software giant's 44-cent per-share profit bested estimates by two cents a share. Wall Street didn't seem as concerned that the company also trimmed its earnings forecasts for the fiscal fourth quarter and next year.

But they weren't giving mobile phone stocks any breaks after sector giants

Nokia

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and

Ericsson

(ERICY)

issued grim outlooks for the cell phone business. Nokia beat first-quarter earnings targets while Ericsson met lowered estimates.

Struggling telecom giant

Nortel

(NT)

was also in the doghouse after announcing plans to slash another 5,000 jobs by midyear. The company met twice-lowered first-quarter earnings estimates, however, posting a loss of 12 cents per share, excluding charges.

And server giant

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

was another big loser after it reported

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softer-than-expected third-quarter sales and warned of a sharp growth slowdown for next year. The company did beat much lowered analyst earnings expectations by a penny with eight cents a share, but that's down 43% from the 14 cents a share the company earned in the same period last year.

Chip makers had mixed news last night. Communications chipmaker

Xilinx

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missed its fiscal fourth-quarter earnings estimates by three cents with 19 cents per share. The company earned $78.3 million, or 22 cents per share, in the same quarter a year ago. Revenue was $407 million. And

PMC-Sierra

(PMCS)

met earnings estimates of two cents a share, but down from 17 cents per share in the equivalent period last year. The company lowered its estimates in March from 13-15 cents per share to 2-3 cents per share.

Gateway

(GTW)

delivered first-quarter earnings down sharply from the year-ago period, but the company stuck by its

prior guidance for the rest of the year.

And online auctioneer

eBay

(EBAY) - Get eBay Inc. Report

breezed past Wall Street's quarterly earnings estimates and boosted revenue projections for the second and third quarters. And electronic data storage outfit

Emulex

(EMLX)

met Wall Street's earnings estimates for its fiscal third quarter.

Set to report earnings today is pharmaceuticals behemoth and Dow component

Merck

(MRK) - Get Merck & Co., Inc. (MRK) Report

.

Wall Street began gobbling up tech stocks again this month -- since April 4 the Nasdaq Composite is up 33%, erasing all of its March losses, and has closed in the red only twice. After months of earnings warnings and a "lack of visibility" in the tech sector, first-quarter earnings season has brought a few morsels of good news. And investors have begun to bet -- once again -- that the economy and the market are finally poised for a turnaround. Wednesday's

surprise intermeeting cut, which dropped the federal funds benchmark rate to 4.5%, was icing on the market's cake.

But it's hard to say whether visibility has really improved. Corporate fundamentals remain weak, and many stock valuations, especially in the tech sector, are still high on a historical basis. If the economy is not poised for a rebound in the second half of the year, as so many CEOs and analysts are again predicting, companies could be forced to lower second and third quarter estimates all over again next month.

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International

Ericsson and Nokia's sobering outlooks for the cellphone industry were weighing on Europe this morning, and the major indices were teetering near flat. London's

FTSE 100

was up 18.6 to 5890.2 and the Paris

CAC 40

was up 6.7 to 5486.8. Frankfurt's

Xetra Dax

was off 1.92 to 6180.0.

Asian stocks pulled back after a two-day rally overnight. News that electronic components maker TDK might face weaker earnings sent Tokyo's

Nikkei 225

into a tailspin. The key index fell 102.6 points, to 13765.7. Property shares weighed on Hong Kong's

Hang Seng

, which fell 100.8 points to 13,448.1.