A rocking and rolling stock market, the U.S. dollar at record lows, and oil at record highs is setting the stage for an unusually, volatile Thanksgiving Eve in the markets.

Consumer sentiment, leading indicators, oil inventory data and jobless claims are key data points for Wednesday trading. Also, a few important earnings will be reported including tractor maker Deere, an economic bellwether, and teen retailer Abercrombie and Fitch.

The Dow finished Tuesday at 13,010, up 51.70 or 0.4%. That was after it rose on the opening, then slumped, then rose, dipped down, then rose even more. The Dow was down as much as 118 and up as much as 148 during the session. For the year, the Dow holds a gain of 4.4%. Nasdaq, meanwhile, rose 3.43 points, or 0.1% to 2596.81. It is up 7.5% for the year. The S&P 500 gained 6.43 pints, or 0.4% to 1439.70. The S&P has gained 1.5% for the year.

Wilting Dollar

The dollar, meanwhile, fell 1% to $1.4812 per euro

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[EUR-TN  Loading...      ()   ], a record. The dollar though gained 0.1% against the yen

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[JPY-TN  Loading...      ()   ]. The flight-to-safety trade in Treasurys continued as rumors of all sorts swirled around the market. One popular rumor was that the Fed would hold an emergency meeting and cut rates. That rumor circulated in overseas markets Tuesday morning, but was revived just before the Wall Street close and was given some of the credit for the late day runup in stocks.

Rumors also circled financial institutions, including Countrywide

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[CFC  Loading...      ()   ], which issued a statement saying it was adequately capitalized. Countrywide Bank "has sufficient liquidity available to meet its projected operating and growth needs," said the company in a statement. Freddie Mac

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[FRE  Loading...      ()   ] saw its stock get pummeled after reporting a $2.3 billion loss and flagging that it may have to cut its dividend in half.

Traders are looking forward to a busier than usual pre-holiday session Wednesday. Oil, earnings and consumer confidence are among the things they'll be watching. "Tomorrow (Wednesday) is going to be a little more choppy than you'll usually see the day before a holiday," said Eckhart and Co's Peter Costa. "There was volume that was surprising on a Tuesday going into a holiday."

The Tuesday and Wednesday before the Thursday Thanksgiving holiday are usually slow, with Tuesday quiet and Wednesday, just plain dull. But the activity Tuesday makes Wednesday even more interesting. "We'll have some stuff to talk about," said Costa, managing director." People are going to try to get through with their portfolios in tact."

University of Michigan consumer sentiment, released at 10 a.m. will get more attention than usual since recent readings have been weak and economists worry the consumer could be getting ready to pull back, just as holiday shopping is underway. Interesting that Comscore released data Tuesday that could be some good news for retailers, at least those online. It said that its first holiday season e-commerce update shows that there was a 17% increase in online shopping during the first 18 days of the holiday shopping season. Comscore said sales totaled $7 billion for the period.

Boiling Oil

If the equities markets are unusually interesting Wednesday, the energy markets might actually even make history. M.F. Global senior vice president John Kilduff said there's a good chance oil could break $100 per barrel on the NYMEX Wednesday or in Friday's session.

Oil finished at $98.03 per barrel in the regular session on NYMEX but moved higher than that after hours. Oil was up $3.39 per barrel or 3.6%. The weak dollar was a contributor to the move.

"The low volume is what's going to help things get there this week," said Kilduff, a CNBC contributor. Kilduff said if oil breaks $100 it could keep going higher, and for now he expects it to top out at about $108-110 per barrel.

"It's going to keep going" above $100, he said. "That will serve as a floor for prices ... It was such a psychological barrier. It'll be a support level for awhile. You'll almost see capitulation and some real scared short covering emerging ... I would expect some follow through buying."

Window on the Fed

The Fed, in a new effort at transparency, reported a more detailed forecast Tuesday than it has previously released. The Fed plans to issue its forecast four times a year, rather than two as it has in the past.

The forecast shows the Fed reduced its outlook for U.S. growth in 2008 to 1.8% to 2.5%, down from the 2.5% to 2.75% it had previously expected. The Fed also makes it clear it is not worried about inflation.

"2008 looks soft. I call it subprime," said CNBC's Larry Kudlow, adding that the outlook infers a hefty cut in interest rates next year.

"You could have almost 100 basis points from here. The Fed's statement implies very large interest rate cuts next year," Kudlow said. "The Fed message today -- subprime growth, no inflation, and plenty of interest rate cuts on the way."

Traders reacted to another Fed statement. The minutes of the last FOMC meeting, released at the same time, showed the October rate cut was a close call. Stock traders took that to mean the Fed could be on hold at its next meeting in December.

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