Oracle's disappointing earnings report could hang over the tech sector Thursday morning.
Traders will also be watching the fourth quarter final GDP number, reported at 8:30 a.m. and weekly jobless claims, also at 8:30.
There are no fewer than five key Fed officials speaking throughout the day, plus there is some Fed action investors are anticipating watching. The markets will be paying attention to the Fed's first weekly Term Securities Lending Facility auction in midafternoon. The auction was established to offer general Treasury collateral to primary dealers in exchange for other debt collateral for a 28-day period.
The Fed will also announce information on the lending at its discount window, and it should be interesting to see what type of activity has come from investment banks, visitors to the window for the first time last week. Those investment banks and brokers, by the way, lost 3.73 percent in Wednesday trading. Early in the day, Treasury Secretary Hank Paulson said the Fed should tighten oversight of the industry now that it can tap into the Discount window.
"The GDP is old news now. I'm still looking for 0.6 percent," said Mesirow Financial Chief Economist Diane Swonk. "The first quarter looks like it's coming in at 0.3 ... basically flat. The only reason you're positive is because of inventory building."
The Fed officials speaking include Minneapolis Fed President Gary Stern at 8 a.m.; Fed Governor Randall Kroszner at 8:15; Cleveland Fed President Sandra Pianalto at 12 p.m.; Atlantic Fed President Dennis Lockhart at 12:20 p.m. and Fed Governor Fredric Mishkin at 7:30 p.m.
Swonk said the Fed's message should not change in the comments from officials Thursday. There will be concern about inflation and concern about slow growth. "On the Fed, there is real resistance to go below two percent" on the target Fed funds rate, she said. "They're really very concerned about this issue of going back into territory that's reminiscent of 2003."
Oracle's important after the bell earnings report included disappointing news on revenues, which were weaker than expected. Oracle reported earnings of $1.34 billion on revenues of $5.35 billion, below the $5.42 billion estimate.
Oracle shares were lower in the after hours session Wednesday, after moving up in sessions ahead of the report. Oracle's per share earnings of $0.30 per share was in line with expectations. On a conference call, Oracle officials said they were seeing uncertainty among customers, a worry to investors that are watching Oracle to gauge the broader health of the tech industry.
Thursday's earnings reports include Conagra and Lennar before the bell. Apollo Group and Red Hat report after the bell.
"I don't mind seeing down 110 after yesterday," said Peter Costa, managing director at Eckhart. Costa said volume was light and the market was just coming in after yesterday's wishy washy session. The Dow lost 109.74 or 0.9 percent to 12,422. The S&P 500 was down 11.86 points to 1341, also a 0.9 percent decline. The Nasdaq was off 16.69 points, or 0.7 percent.
The markets to watch though were energy and foreign exchange. The dollar took a steep dive in a two day selloff, while oil shot up 4.62 percent to $105.90 on the weak green back and tighter than expected inventory data. The dollar fell 1.4 percent against the euro to $1.5832 per euro, giving it a 7.8 percent decline year-to-date.
The S&P energy sector rose 2.16 percent, while the financials were down 3.47 percent. Some of the winners include Apache, up 6 percent, Transocean up 2.54 percent and Baker Hughes, up 3.9 percent. On the downside, Merrill Lynch took a more than 7 percent dive; J.P. Morgan was down 4.23 percent and Citigroup was off 5.85 percent. Banks were weak on worries of more writedowns.