The European Central Bank, a corporate earnings deluge and the fallout from Wednesday night's presidential debate could all sway markets Thursday.
In their immediate analysis of the debate, market strategists generally said it helped Hillary Clinton maintain her lead over Donald Trump. Markets have already been pricing in a greater likelihood of a Clinton win and U.S. stock index futures were slightly higher near session highs after the debate.
Paul Hickey, co-founder of Bespoke, said many investors are cautious due to the big events facing the markets, but he thinks stocks could continue to move higher.
"I think the overall tone people are taking is you have the election, you have the Fed coming up in December and you have the earnings season kicking off. The attitude is: 'Why am I going to take a stand on going long here? There are too many unknowns. Why should I be overly aggressive.' Our view is we're going to have a more positive market performance this earnings season as analysts' tone this earnings season was so negative," he said.
Early morning earnings are expected Thursday from Travelers, Verizon, Union Pacific, Bank of NY Mellon,American Airlines Group, Walgreens Boots Alliance, Illinois Tool Works, Pulte Group, PPG, Dunkin Brands, Alliance Data, Snap-On, Nucor, Danaher and Fifth Third, among others.
Hickey said he has been watching the performance of HYG, the iShares iBoxx High Yield Corporate Bond ETF, which has been outperforming the S&P 500.
"I think it's an overall function of improved tone in credit markets … the high-yield market specifically. They usually trade close with each other. The time you really want to focus on it is when you see divergence in the data and that's what we've basically seen," he said. "When you see a divergence like that, you see it resolve itself and our view is that you'll see the equity markets catch up."