Even with jitters about the worst earnings season in years, the stock market is in striking distance of its all-time high and could get there in the next few sessions, barring any real earnings debacles.
Oil surged Wednesday after a lower-than-expected build in U.S. inventories, giving a push to energy stocks. With rising oil at its back, the stock market bounded higher Wednesday, in the absence of any earnings bombshells and despite weak industrial production and Empire State data.
"That's the conundrum," said Art Hogan, chief market strategist at Wunderlich Securities. So far, big names have not spooked the markets with dire warnings about dollar-related profit hits. "Everybody's waiting for the sucker punch."
While it's still early in the reporting season, four out of five of the three dozen S&P companies reporting have beaten profit forecasts. According to Thomson Reuters, earnings are expected to be down 2.6 percent, a slightly narrower loss than that expected this time last week. That would be the first profit decline in six years.
Thursday's reports will include Citigroup, BlackRock, Blackstone, United Health, Sherwin Williams, Mattel, American Express and Goldman Sachs, a stock that has been rallying ahead of its report. Positive fallout from Netflix's after-the-bell report could spill over into momentum names Thursday. Netflix missed on the earnings per share but its stock surged as revenues grew 24 percent and it added more subscribers than expected.
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The jumped 10 Wednesday to close at 2,106, not far from its all-time high of 2,119. The S&P energy sector was the top performing industry group with a gain of 2.3 percent. Materials gained 1 percent, tech was up 0.9 percent and financial were 0.4 percent higher.
"The energy sector has been the leader four of the last six trading days. Whatever this is—whether it's starting to formally bottom or a technical bounce—whatever it is has caught a lot of people leaning in the wrong direction," said Hogan. "It's a macro factor at a time when we're really micro-focused…. We also haven't had a tape bomb yet in the earnings cycle."
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Scott Redler, partner with T3Live.com, said a number of big momentum names, such as Amazon and Apple could test the market next week when they report earnings, but as of now, the quarter is going well.
"Now that oil is moving up, the oil stocks are on highs and that's one contributing factor providing a little more traction," he said. "You had J.P. Morgan making new highs. It's providing some leadership to the banks and you have Goldman Sachs near highs…. You have Intel, which some feared was going to get hurt. You have four or five sectors moving up together supporting this move. It feels as if this time we can get traction. The Russell and the mid-caps are at highs for the year."
Redler said the catalysts are there to push the S&P back to its record high in the next week or so.
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"You have oil proving to be more than a dead-cat bounce," he said, adding that it appeared to signal a bottom March 18. "You add that all up and it could equal more traction and a bit of a trend versus the range we've been stuck in for the past two months."
Besides earnings, there are weekly jobless claims and housing starts and building permits at 8:30 a.m. The Philadelphia Fed survey is at 10 a.m.
There are also Fed speakers, including Fed Vice Chairman Stanley Fischer, who speaks at the IMF's spring meeting in Washington at 3 p.m. ET. Atlanta Fed President Dennis Lockhart speaks at 1 p.m. on the economic outlook in Palm Beach, Florida; Cleveland Fed President Loretta Mester speaks at 1 p.m. on the economic outlook at the Forecasters Club of New York, and Boston Fed President Eric Rosengren speaks in London at 1:30 p.m. ET.