Stocks rose in early trading Wednesday as investors digested better-than-expected results at Morgan Stanley and news that the government plans to free up billions of dollars at Fannie Mae and Freddie Mac that could help struggling homeowners.

The advance comes a day after one of Wall Street’s biggest rallies in years on strong investment bank results and several moves from the Federal Reserve, including a rate cut, aimed at jump-starting the credit markets.

Morgan Stanley’s earnings indicated that the bank is relatively healthy like Lehman Brothers Holdings Inc. and Goldman Sachs & Co., rather than at risk of failure like Bear Stearns Cos.

And the Office of Federal Housing Enterprise Oversight, which oversees government-sponsored Fannie and Freddie, said the change should result in an immediate infusion of up to $200 billion into the market for mortgage-backed securities. This could mean greater demand for mortgages _ an aid for struggling homeowners hoping to refinance at more favorable terms.

In the first minutes of trading, the Dow Jones industrial average rose 33.46, or 0.27 percent, to 12,426.12.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 7.77, or 0.58 percent, to 1,338.51, and the Nasdaq composite index rose 8.84, or 0.39 percent, to 2,277.10.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com