Weekly jobless claims and consumer inflation data will catch the attention of markets Thursday, as investors continue to assess the damage done in last week's market storm.
Stocks Wednesday were barely changed at the close, but the Dow traveled in a triple digit range on both sides of the unchanged mark, before closing 4 points higher at 11,410. The S&P 500 was up 1 at 1193, while the Nasdaq slipped 11 to 2511. The dollar was slightly lower against the euro, at 1.4426.
"A slow grind higher that tests your patience is just what the doctor ordered," said Jordan Kotick, global head of technical analysis at Barclays. He said it appears stocks hit bottom in last week's mini-crash, but now the market will hopefully move sideways for awhile before retesting those levels. The S&P hit a low of 1101.
"The most trustworthy bottoms come after retests of lows," he said. Kotick added that there are some positives in the markets, including the fact that European bond markets and spreads have stabilized, although the trend has not yet reversed.
Kotick said he is also watching the Australian dollar, which fell sharply in the market turbulence. "You need to see money flow back into the Aussie. That would show a rebuilding of risk taking positions. We're not there yet, but we know what to watch," he said.
What Else to Watch
Besides claims and CPI, both at 8:30 a.m. ET, there are existing home sales, the Philadelphia Fed survey and leading indicators, all at 10 a.m. There are also several earnings of note, including Sears Holdings , J.M. Smucker, The Buckle, and Gamestop , before the bell, and Hewlett-Packard , Gap , Salesforce.com , Intuit and Footlocker, reporting after the close.
Stephen Stanley, chief economist at Pierpont Securities said he expects the CPI to come in at 0.5 percent, and core at 0.2 percent, minus food and fuel. July producer prices Wednesday were higher-than-expected on both the headline, at 0.2 percent and core, at 0.4 percent. The increase of 2.5 percent on year was the biggest rise since 2009 and was blamed partly on higher tobacco prices.
"For me, it's mainly energy," said Stanley of his CPI estimate. "...It's really just a seasonal issue. Gasoline prices typically decline in July but this year, they were flattish so that unwinds some of the progress we made in June. I have the core at 0.2. Last month it was 0.2 but very close to 0.3. We should start to see calming down of auto prices as auto production comes back on stream. I would expect the same of apparel."
Stanley explains claims to come in at the consensus 400,000, slightly above last week's level of 395,000. "There's some possibility the whole FAA thing.. put a little bit of a bump into the number," said Stanley referring to the temporary furlough of Federal Aviation Administration workers during the federal budget debate.
There are a few Fed speakers to watch Thursday as investors await next week's annual Fed meeting in Jackson Hole, Wyo., where Fed Chairman Ben Bernanke first discussed quantitative easing last year.
Dallas Fed President Richard Fisher will be speaking to CNBC's Larry Kudlow at 7 p.m. New York Fed President William Dudley speaks in Newark, N.J. at 8:35 a.m. and in Jersey City at 2:30 p.m.
"The buildup has certainly been huge, and everybody's been comparing it to last year, and that's probably not an unfair comparison," said Stanley, but he added that he doubts a so-called QE3 easing will be announced by Bernanke next week. ""There's a very high bar to do anything significant to the balance sheet." The Fed last week, he noted, took the step of committing to a very low rate environment for two more years.
With the higher than expected PPI, there was some market chatter Wednesday that inflation may be perking up enough to keep the Fed from easing further.
Stocks to Watch
Tech will continue to be in the spotlight Thursday, after Dell's weaker revenue forecast helped lead technology shares to the weakest finish of any sector Wednesday. JDS Uniphase and storage maker NetApp were both off sharply after earnings releases and disappointing outlooks after Wednesday's closing bell. EMC fell in sympathy, losing more than 4 percent after the closing bell.
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