Futures Rise Off Lows as Traders Await Fed

Updated from 6:57 a.m. EDT

Premarket futures rose off their worst levels to forecast a flat open for stocks on Wall Street Wednesday as traders combed through a bevy of corporate earnings and awaited an expected cut in the Federal Reserve's key target interest rate.

After trading sharply lower earlier in the morning, futures for the S&P 500 were down 0.7 points at 938 and were 1.5 points below fair value. Nasdaq futures were lower by 6.4 points at 1302, but were 1.2 higher than fair value.

On Tuesday, stocks posted major gains into the close. The Dow Jones Industrial Average rose 11%, as did the S&P 500. The Nasdaq jumped 9.5%. A large part of the upswing took place during the final hour of trading.

During the upcoming session, investors will be eyeing the Fed's next move regarding interest rates. Policymakers began a two-day meeting Tuesday, and around 2:15 p.m. EDT the market will know definitively if rates have been reduced again. Observers widely expect the central bank to cut the fed funds target rate 50 basis points to 1% to provide additional liquidity to dysfunctional lending markets.

Corporate earnings were also occupying investors' attention. Electronics manufacturer Sony ( SNE) reported a 72% decline in its quarterly profit due in part to recent sharp appreciation of the yen.

In the telecommunications space, cable company Comcast ( CMCSA) reported rising net income on revenue that fell just short of estimates. Telecom services firm Qwest ( Q) posted declining revenue and earnings and said it would cut 1,200 jobs during the fourth quarter.

Oil refiner and gas station operator Hess ( HES) posted higher quarterly earnings.

Meanwhile, glass-panel manufacturer Corning ( GLW) reported revenue that was below expectations and reduced its fourth-quarter sales guidance. Garmin ( GRMN), which makes navigational devices, fell short on its quarterly profit and warned that full-year results will also miss forecasts.

As for consumer staples, Procter & Gamble ( PG) bested analysts' profit estimates, and packaged-food firm Kraft ( KFT) said its income rose year over year on a one-time gain from its disposal of the Post cereal business.

The government's Troubled Asset Relief Program remained in focus, as The Wall Street Journal reported that GMAC, a finance company jointly owned by General Motors ( GM) and Cerberus Capital, is applying for status as a bank holding company to access the Treasury Department's $700 billion capital-injection plan for banks.

Moving to economic data, the Census Bureau's read on September durable-goods orders showed a surprise 0.8% uptick, up from a 5.5% decline in August and better than the 1% drop expected by economists. Excluding transportation, new orders dropped 1.1%, and taking out defense, they edged down 0.6%. A bit later, the Energy Information Administration is expected to roll out its weekly crude-oil inventory numbers.

Ahead of the inventories report, crude oil was rising $3.63 to $66.36 a barrel. Gold was gaining $18.50 to $759 an ounce.

Longer-dated U.S. Treasury securities were appreciating slightly. The 10-year was climbing 2/32 to yield 3.83%, and the 30-year was up 4/32, yielding 4.18%. The dollar was falling vs. its major foreign competitors.

Overseas, European exchanges were mixed, as the FTSE in London moved higher but the DAX in Frankfurt took losses. As for the Asian exchanges, Japan's Nikkei closed sharply higher, while Hong Kong's Hang Seng logged a modest gain.