Weekly jobless claims is the data du jour Thursday as markets countdown to Friday's December employment report.
Economists expect 290,000 Americans filed new claims for jobless benefits, off from 298,000 the week earlier. The claims unexpectedly rose in the week earlier after four weeks of declines, but the four-week average was 290,750.
While the claims number is unrelated to the December employment report expected Friday, traders will look for confirmation of an improving employment trend. Claims are reported at 8:30 a.m. ET and consumer credit is expected at 3 p.m.
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Stocks rallied Wednesday, breaking a five-day losing streak as oil stabilized and the ADP private sector payroll report showed 241,000 jobs in December, slightly more than expected. According to Reuters, economists expect 240,000 nonfarm payrolls in the government report Friday, down from a surprise 321,000 payrolls in November.
"If you get a sub-300,000 (claims) number, it will be all good," said Adrian Miller, GMP director of fixed income research. He added that the claims are being watched closely to see if jobs related-data is all on the same path of improvement.
The S&P 500 jumped 1.2 percent to 2025 Wednesday, erasing a good chunk of a 4.8 percent loss made between Dec. 29 and Jan. 6. The ADP report heightened expectations for an upside surprise in Friday's jobs report, which would be a positive catalyst after concerns about Europe and sinking oil prices soured the new year market mood.
Oil prices stabilized Wednesday, with West Texas Intermediate futures for February rising 1.5 percent to $48.65 per barrel, reversing overnight losses. Brent futures rose 0.1 percent to finish at $51.15 per barrel, after falling through $50 a barrel.
Data showing deflation in the euro zone Wednesday raised expectations that the European Central Bank would announce a quantitative easing program later in the month, and that weighed on the euro, sending it to a new 9-year low.
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U.S. yields meanwhile rose, with the 10-year Treasury at 1.97 percent and the 30-year yielding 2.572. Shorter-term Treasurys were mixed late Wednesday after some bond investors viewed the Fed's minutes from its December meeting as slightly dovish.
Five-Day Rule
Stocks have been volatile in the first days of January, and traders are watching to see if the market is higher or lower after its first five days, which end Thursday. The S&P 500 would have to reverse the 1.6 percent loss its seen so far year-to-date and then some to send a positive market signal.
According to the Stock Trader's Almanac, the last 41 positive first five days were followed by full-year gains 85.4 percent of the time, or 35 times. The average gain was 14 percent for the following year. Exceptions include 1994 and four years when there was war in both Vietnam and the Middle East.
The market missed the boat this year for what is technically called a 'Santa Claus' rally, a typically positive gain in the final five days of the year and first two of the new year. However, it still has a chance to prove positive on the broader 'January barometer,' which is the performance for the entire month of January.
The Stock Trader's Alamanc says a positive January is a more accurate predictor for the direction of the year. In 14 of the last 16 years, the market's annual performance followed January's direction. However, that did not hold true last year.
While the S&P 500 was down 3.6 percent in January, 2014, it was up 11.4 percent for the year. The first five day rule did not work either for stocks, since the S&P was off 0.6 percent in that period last year.
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A CNBC survey of Wall Street strategists shows they expect a 7.8 percent gain for the S&P in 2015 from 2014 levels.
Besides jobless claims, there are several earnings reports expected Thursday morning, includingConstellation Brands, Family Dollar, Apollo Education Group, Global Payments and Schnitzer Steel. After the bell reports include Bed Bath and Beyond, Helen of Troy, PriceSmart, The Container Store and Ruby Tuesday.
There are also Fed speakers. Boston Fed President Eric Rosengren speaks at 1 p.m., and Minneapolis Fed President Narayana Kocherlakota speaks at 8 p.m.