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Market Insider/Thursday Look Ahead

Stocks will be challenged Thursday to shake off the crankiness that gripped the market late in Wednesday's session. Inflation data, a light flow of earnings and some regional economic surveys are on the calendar.

"It's like there's just one door, and everybody's trying to get out of it at the same time," said a trader as that wave of selling hit in the last half hour of trading.

The CPI, consumer inflation data, is reported at 8:30 a.m. Thursday and is expected to show a modest increase of 0.2%, in line with Wednesday's producer prices report. The Empire State manufacturing survey is also due at 8:30 and at noon, the Philadelphia Fed's survey is reported.

Fed speakers Thursday include Chicago Fed President Charles Evans who speaks about economic mobility in Chicago at 9:45 a.m. New York time, and Kansas City Fed President Thomas Hoenig who speaks about the economic outlook in Santa Fe at 1:30 p.m.

On the earnings front, reports are due from Tyco and Starbucks .

Merrill Lynch's financial services conference continues in New York and may make headlines for a third day. A highlight Thursday morning will be the presentation by Duncan Niederauer, named CEO of the NYSE Wednesday, shortly after Merrill Lynch said it landed NYSE Chairman and CEO John Thain to be its CEO, replacing Stan O'Neal.

Niederauer is currently Chief Operating Officer of the NYSE. Both he and Thain appeared separately with Maria Bartiromo on "Closing Bell" Wednesday, shortly after news of their individual appointments was released.

"I think the strategy course is set properly. It's just a matter of a lot of hard work and continuing to go in the direction we've gone in," Niederauer told Bartiromo. He also said the NYSE has "set the table for potential consolidation down the road." Not surprising, as exchanges worldwide rush to find partners.

In fact, a rumor circulated Wednesday as CNBC's Bob Pisani reported that NYSE's board was holding its unscheduled meeting that NYSE was planning to announce a merger with NYMEX. NYMEX would not comment on that, but CNBC's Rebecca Jarvis knocked the story that the meeting was about a deal at midday. (Check out Pisani's blog here).

Still a good number of traders wouldn't be surprised to see those rumors resurface.

Thain takes the helm at Merrill at a rocky time for the firm. O'Neal was ousted as the firm took $8 billion in subprime-related write-downs. Thain told Bartiromo that he believes the mortgage business is attractive when risk is properly managed. Wall Street responded favorably to his appointment and Merrill stock got a lift from the news.

But financial stocks had gotten a jump start right out of the opening gate on comments from Bear Stearns chief financial officer. You might guess he was also speaking at that Merrill conference where Goldman Sachs CEO appeared the day earlier, sparking a rally with his comment that Goldman would not take a write-down.

Bear CFO Sam Molinaro said Bear expects to write down $1.2 billion in assets tied to mortgages in the fourth quarter, far less than expected.

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By the close, the days gains were gone and a late selloff took the Dow down 76, after a steeper drop. The S&P 500 was off 10, and the Nasdaq fell 29 points, or 1.1%, as techs once more took a hit. The S&P technology sector was off 1.5%. The financial sector was down 0.6% but many of the big Wall Street names were higher, including Goldman Sachs, Lehman and J.P. Morgan.

More is More

The Fed is about to flood the zone. Soon, investors will have more fodder for their pre-game debates about Fed meetings, thanks to a new plan for transparency, announced by Fed Chairman Ben Bernanke Wednesday morning.

Bernanke says he hopes the changes give "households" and businesses more timely insight into the Federal Open Market Committee's outlook and help them better understand how policy decisions are made. Hopefully, more is more.

Some highlights:

  • The FOMC will release projections four times a year rather than two
  • Forecasts will be extended to three years from two
  • FOMC meeting members will provide forecasts for overall and core price inflation, real GDP and the unemployment rate, and drop nominal GDP
  • The Fed will also publish a comparison with the previous set of quarterly projections, along with new charts and ranges for each variable
  • Explanations of the projections will be published with the minutes of the meeting at which they were discussed. The descriptions will show the outcomes that participants see as most likely, and also possible risks.

The first expanded projections, which now will go through 2010, will be released with the Oct. 30-31 FOMC meeting minutes on Nov. 20.

"Bernanke's message? He's talking the headline inflation rate," said CNBC's Larry Kudlow. "That's going to mean no lower rates for many months."

"It just takes easing off the table for several months ... no more core inflation. No more core bulls**t."

Ok, we know he feels strongly about that. Core inflation are the numbers in PPI and CPI that leave out energy and food costs, two areas we know are on the rise. Obviously data that includes those items would show prices moving higher than current core data shows.

CNBC's Rick Santelli saw things similarly. "The Fed now is moving toward acknowledging and even saying that headline inflation is a better long-term gauge over core ... All of my past trading buddies and sources say it's a good move by the Fed," Santelli said. "They're really happy that those of us that eat, drink and drive are more in sync with the Fed. There's one issue though of why. Is there a scary side to that move or is Bernanke trying to get ahead of the curve?"

Half Way There?

A majority of economists surveyed by the Wall Street Journal said the credit crunch and period of market turmoil is about half over. Another 15% said it was mostly over, and a cranky 25% said it is still in the early stages.

The Wall Street Journal's latest economist survey also showed the 55 economists saw housing as the biggest downside risk to their forecasts (30%), then the credit crunch (28%).

But there were some warning signs for those who hold out hope the American consumer will continue to act as a spend thrift Atlas of sorts, holding the world economy on its back. Four out of five of the economists saw the housing market's problems spilling over into consumer spending.

Merrill Lynch Wednesday released its latest survey on global fund managers which showed the majority of have not dramatically changed their strategies but they are becoming more nervous about the long term credit outlook. The majority also still favor stocks and believe the global economy can withstand a downturn in the U.S.

Meltdown

United Rentals stock lost 30% of its value Wednesday. The company said Cerberus Capital Management is pulling its $4 billion takeover offer, the latest casualty of the credit crunch.

In another, odd merger story, Delta Airlines denied a news wire report that it is in talks with United Airlines about a merger. Delta earlier said though it had formed a committee to study its strategic options, including mergers. Hedge fund Pardus Capital said it favors the idea of a merger with UAL .

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.