Thursday's markets will navigate data on jobs, housing and inflation, but traders may be most interested in the words of Fed speakers.
Five Federal Reserve officials will get special attention because the idea of Fed tapering, or dialing back, on its quantitative easing program has been the talk of the street this week.
Art Cashin, director of floor operations at UBS, said traders are looking for answers from the Fed on what it intends, after a Wall Street Journal article this weekend said Fed officials are planning to pare back their purchases gradually. The Fed is currently buying $85 billion in Treasurys and mortgage securities each month, in a program that has been viewed as a positive for stocks and a hedge against economic weakness.
"What I'm looking for at some point, the Fed is going to have to talk about it, not just the tapering – the fact that there are fewer mortgage bonds, fewer Treasury bonds, " Cashin said. The Congressional Budget Office this week said it expects a smaller deficit - $642 billion this year – and traders now expect the Treasury to cut back on its new issuance, resulting in fewer securities pouring into the market.
"They've got to get it out there clearly, and usually what (Fed Chairman Ben) Bernanke does, is he starts hinting. On Thursday, you're going to see a saloon full of Fed speakers, but this is something you're going to want to reserve for the chairman," he said.
Philadelphia Fed President Charles Plosser speaks at 3:45 a.m. ET in Milan on the economic outlook, while Boston Fed President Eric Rosengren speaks at 7:45 a.m. on the impact of austerity on monetary policy, also in Milan.
Dallas Fed President Richard Fisher speaks at 9 a.m. at the NABE energy conference in Houston, and Fed Gov. Sarah Bloom Raskin speaks on the prospects for recovery at 12:30 p.m. San Francisco Fed President John Williams speaks at 2:30 p.m. on the economy in Portland, Ore.
As for Thursday's data, jobless claims will be particularly watched because the improvement in claims has been a bright spot, and is possibly signaling an improving employment picture. Last week, there were 323,000 unemployment claims reported and the four year average is at a five year low. Claims are reported at 8:30 a.m.
"We're at 330,000. We expect the generally good trend to continue. Maybe last week was a little overstated, but we still think things will be good," said Michael Feroli, chief U.S. economist at J.P. Morgan.
(Read More: Yoshikami: What Happens After Ben?)
There is also CPI, consumer inflation data and housing starts, both at 8:30 a.m. The Philadelphia Fed survey is released at 10 a.m. There are a few companies of interest reporting earnings, including Wal-Mart and Kohl's ahead of the open. Dell, JC Penney, Nordstrom, Aplied Materials, and Autodesk report after the close.
Stocks Wednesday closed at new highs, after the market got off to a slow start on disappointing industrial production data. But the market was helped by news from a sector that's been helping drive gains – housing. The National Association of Homebuilders sentiment reading rose more than expected in May and sales expectations were at a five-year high.
(Read More: Talk of Fed Tapering Not Spooking Markets Yet)
Feroli raised his forecast for second quarter GDP growth to 2 percent from 1.5 percent this week, after better-than-expected retail sales. "I think you have mixed messages. Manufacturing is in a little bit of a soft patch. Consumers are doing pretty well. Housing hasn't changed much," Feroli said.
A diverse group of stocks helped carry the market higher. Of companies in the S&P 500, 187 stocks reached new highs Wednesday and a number of them were at all-time highs including Wal-Mart, MasterCard, Illinois Tool Works, 3M, Pepsi, Estee Lauder and Blackrock. Some of the defensive sectors were back in the lead with consumer staples and utilities among the top three.