Investors checking out US economic fundamentals

Weekly jobless claims and other data on Thursday will put the U.S. economy firmly at the center of investor focus.

Initial claims for unemployment for the week of Feb. 15, released at 8:30 a.m. on Thursday, are expected to increase moderately to 285,000 from 283,000 the week prior.

Robert Pavlik, chief market strategist at Boston Private Wealth, expects a figure of about 290,000 but said the data should indicate an economy "that's adding 300,000 jobs a month."

The consumer price index also comes out at 8:30 a.m., with analysts expecting a flat read on January. Durable Goods orders at 8:30 a.m. are expected to show slight gains in January, after a 3.4 percent decline in the prior month.

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

One of the final housing data points for the week comes out at 9 a.m., with the Federal Housing Finance Agency Home Price Index.

Pavlik said the recent softness in housing data was seasonal, with the national cold wave discouraging house hunters.

"I'm still somewhat optimistic," he said, citing stocks in the materials sector and associated with housing as doing well. Home Depot and Lowe's both topped earnings expectations this week.

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Retailers wrapping up the earnings season on Thursday include Kohl's before the bell, and Gap, Ross Stores and JC Penney after the bell.

"We haven't been concerned about the fourth quarter," said Nick Raich, CEO of The Earnings Scout. "We're going to start to be worried about the first quarter and a fairly sharp slowdown in the first half (of 2015)."

On the other hand, LPL Financial's Chief Investment Officer Burt White is more optimistic on earnings.

"Fourth-quarter 2014 results have beaten earnings expectations at a solid clip, while guidance has delivered the typical conservatism, outside of the energy sector, despite the drag on foreign-sourced profits from the strong U.S. dollar," he said in a note.

U.S. stocks closed narrowly mixed on Wednesday, after struggling for direction amid firming oil prices and some debate over the tone of Fed Chair Janet Yellen's congressional remarks.

"I think there's a lot of debate on when the Fed is moving rates," Pavlik said. "Personally, I think (the Fed is) more dovish than hawkish.The market is trying to get it figured out. That's why we're trading in a narrow range here."

The Dow Jones industrial average closed at its third record for the day at 18,224.57. The S&P 500 closed down slightly to 2,113.86, after touching a new intraday record.

The Nasdaq briefly traded positive on Wednesday and was within 20 points of touching the key 5,000 level last reached in March 2000 during the tech bubble. However, the index broke a 10-day win streak to close down 0.98 points at 4,967.14. Tech heavyweight Apple closed down 3.38 points, or 2.56 percent, at $128.79 per share, off highs of $133 a share.

Todd Salamone, director of research at Shaeffer's Investment Research, said the Nasdaq's 10-day run was still a bullish sign.

Other analysts were also optimistic on the market overall.

"The case for higher prices in the stock indices remains unchanged and the indices continue to make upside progress," S&P IQ Capital's U.S. Equity Strategist Sam Stovall said in a Wednesday report. "The VIX continues to drop, remaining below 15 and now reaching the 13 level. This is supportive of the bullish case and the rally."

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14 on Wednesday.

"I'm really shocked to see it this low," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "We've got all sort of issues" including Greece, Ukraine and a debt ceiling deadline that are still not fully resolved.

"I feel a little less confident in this rally to record highs than I did end of last year," Frederick said.

He said that diminished volatility in oil likely provides some support for the market.

Crude oil futures settled up $1.71, or 3.47 percent, to $50.99 a barrel on the New York Mercantile Exchange, its best day since Feb.12. Brent crude traded near $62 a barrel.

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The U.S. Energy Information Administration reported that weekly crude inventories rose 8.4 million barrels, more than expected. The figures were in line with Tuesday's American Petroleum Institute report of 8.9 million barrels.

Another energy sector indicator, natural gas inventories, comes out at 10:30 a.m. on Thursday.

CORRECTION: Robert Pavlik serves as chief market strategist at Boston Private Wealth. A previous version of this article misstated the name of his employer.