Stocks may try to shake off losses Thursday, but spiking oil prices and a weak dollar could hold back efforts to rally.
Weekly jobless claims, reported at 8:30 a.m., and OFHEO's first quarter home price data at 10 a.m. are the only economic data points on the menu. For the energy market, natural gas inventories are released at 10:30 a.m.
Oil's ramp up Wednesday scorched stocks even before the 2 p.m. Fed news gave them a final kick. In its meeting minutes, the Fed basically signaled the door is shut on further rate cuts and said cutting rates in April was a close call. The Fed also released a revised economic forecast showing a slower growth rate of 1.3-2 percent for 2008 and a higher view of unemployment, to a level of 5.5 to 5.7 percent from 5.2 to 5.3 percent.
The Dow fell 227 or 1.8 percent to 12,601. The Nasdaq was off 43.99 to 2,448.27, off 1.8 percent. The S&P 500 slumped 22 points or 1.6 percent to 1,390.71.
"It's a given the bears are out of the woods, if not in complete control," said Art Cashin, UBS director of floor operations. Cashin pointed to an important move in the S&P which fell below 1,400. "They're down a lot of money in two days, so they're technically oversold but they have damaged themselves."
Cashin said the fall below 1,400 means that stocks could now be moving lower to the middle of a range between 1,380 and 1,430 on the S&P. He said this latest move would give weight to the argument that the market's recent rally was just a rally in a bear market.
"It certainly has many of those aspects. It topped out just as the Vix bottomed out," said Cashin, noting there were also signs of complacency.
For Thursday, stocks "are very oversold. They could try to rebound. You're going to stay volatile because you're coming up on a three day weekend." Cashin said the market should get thinner as investors leave for the weekend, but stocks mostly do better the Friday before a long weekend.