Futures Fall as Greek Contagion Fears Rise

U.S. stock index futures pointed to a lower open Wednesday in the wake of a sharp selloff in the previous session caused by another Greek debt downgrade, but comments from the Federal Reserve could change momentum later.

While many traders were ensconced in the Senate subcommittee hearing on Goldman Sachs , Standard & Poor's downgraded the debt of both Greece and Portugal, pushing indexes to their biggest one-day losses since Feb. 4.

The CBOE volatility index, widely considered the best gauge of fear in the market had its biggest one-day spike in 18 months.

The rally that's been in place since March looks to be running out of steam and stocks could be due for a significant correction, Bill Strazullo, chief market strategist and Partner at Bell Curve Trading, told CNBC.

"The next couple of days are going to be critical to see if we can hold that shorter-term momentum together," Strazullo said.

Mortgage applications fell last week as a drop in home refinancing volume outweighed the highest demand for home purchase loans in six months, according to the Mortgage Bankers Association.

The Fed concludes a two-day meeting with its latest interest rate decision and statement at about 2:15 pm New York time. No change in rates is expected, but Wall Street will be watching for any indications about when the "extended period" language regarding interest rates might change.

On the earnings front, Dow Chemical posted better-than-expected earnings as pricing, volume and sales spiked.

And Comcast reported a 12 percent increasein profitas more consumers signed up for digital cable TV and high-speed Internet services. The nation's largest cable TV provider also said advertising on its cable channels rebounded in the quarter, indicating that an economic upturn is taking hold.

But Sprint posted a quarterly loss that was in line with expectations as customer losses slowed from the same period a year ago.

After the closing bell, Visa , Baidu , and Allstate will be among those reporting earnings results.

Another Treasury auction is on tap today as well, with the government selling $42 billion in 5-year notes. The results, as usual, will be available shortly after 1 pm.

European shares were loweracross the board with banks leading the declines on the back of concerns over Greek debt contagion. Asian shares ended lower, also on the debt concerns.

Several reassuring comments emerged from Europe including European Central Bank Governing Council member Axel Weber, who said the Greek crisis presents no threat to the euro. Fellow Council member Ewald Nowotny said fears that Greece's debt problems could spread to other euro zone countries are "unfounded."

In other news: Republicans are floating their first financial regulation reform counterproposal, after successfully blocking a bid to start debate on the existing Senate bill for the second straight day.

This Week:

WEDNESDAY: GE and BofA shareholder meetings; Weekly mortgage applications; Weekly crude inventories; Fed announcement (2:15 PM ET); Earnings from Visa, Allstate, Baidu

THURSDAY: Weekly jobless claims; Earnings from ExxonMobil, ConocoPhillips, P&G, Aetna, Bristol-Myers Squibb, Burger King, Kellogg, Motorola, Time Warner Cable, Viacom

FRIDAY: Berkshire Hathaway annual meeting; AT&T shareholder meetings; GDP; consumer sentiment; Earnings from Chevron