An important batch of U.S. economic data could influence Thursday's markets, even as they continue to feel the long dark clouds of Europe's debt crisis.
Weekly jobless claims, August consumer inflation data and the Empire State survey, are expected at 8:30 a.m. ET. August industrial production will be reported at 9:15 a.m., and the Philadelphia Fed survey is due at 10 a.m. ET.
Traders are watching to see if jobless claims will head back below 400,000 or edge up again. The expectations are for 415,000 new claims. The Philadelphia Fed survey is also important since it is a relatively current guide to manufacturing activity in the mid Atlantic region. The Philadelphia survey last month was reported at a shocking negative 30.7, its worst level since March, 2009. It is expected to come in at negative 12 this month.
As financial markets watch developments in Europe, traders have been debating this week whether stocks have seen the lows of the year. Late Wednesday, Goldman Sachs strategist David Kostin cut his 2011 S&P 500 target to 1250 from 1400, a 5 percent return from current levels.
"Our revised price target reflects the heightened uncertainty that characterizes global equity markets today," Kostin wrote. He said the firm's earnings, dividend and economics forecasts have not been changed. "The unstable macro environment appears likely to persist for the foreseeable future. Downside risk exists to our forecast if the European sovereign debt crisis deteriorates while upside exists if substantial progress is made in addressing the problem."
On Wednesday, the news from Europe was positive for markets, sparking a risk rally in equities, as the leaders of France and Germany, together with Greece, pledged they are committed to the euro zone and that Greece would take its fiscal medicine and remain an important member of the union.
"I'm inclined to take them at face value," said Alan Ruskin, head of G-10 currency strategy at Deutsche Bank. The market has been expecting a Greek restructuring, though German Chancellor Angela Merkel this week has attempted to dispel that idea.
"They have to play with the cards they've been dealt for the time being...until such time that they have an alternative contingency plan in place to support the whole of the European Union's financial system. They want this to work, and they have no alternative at the moment, and Greece seems to be complying," he said.
Another positive factor for markets was comments from European Commission President Jose Manuel Barroso, who said the Commission would present options for a euro area bond. Traders, however, were skeptical since Germany has not supported a pan-European bond.
The EU Thursday releases its interim economic forecasts, updating the outlook for GDP growth and inflation for Germany, France, Italy the UK, Span, the Netherlands and Poland.
Treasury Secretary Tim Geithner Wednesday weighed in on the euro crisis while participating in the CNBC "Delivering Alpha" conference in New York. Geithner also travels to Poland this week, where he will attend a meeting of Euro zone finance ministers Friday.
"This is their challenge, and they have the economic and financial capacity to meet his challenge. The people who are concerned that this is beyond their grasp are mistaken. The size of the challenges they face financially and economically are completely within the capacity of the stronger European members to manage," Geithner said in response to a question from CNBC's Jim Cramer.
Stocks surged after the comments from EU leaders on Greece, but closed off their highs. The Dow was up 140 at 11,246 and the S&P 500 was up 15 at 1188.
"We're just basically trying to get back to where we were tow weeks ago. It's a precarious positioning to be on either side of this market right now. We are in such a volatile period of time that when the market picks a direction, there's virtually nobody that wants to get in the way," said Art Hogan of Lazard Capital Markets.
"Tomorrow's Thursday's so it's anybody's bet. You don't have to flatten out for the weekend yet. You can continue to press your bets and assume the sky might not be falling," he said.
What Else to Watch
In addition to data, there are several speeches to watch, including IMF managing director Christine Lagarde, who gives her first address in Washington on global economic challenges and global solutions at 10 a.m.
Fed Chairman Ben Bernanke speaks at 8:45 a.m. on the regulation of systemic risk at the Fed in Washington and he will not take questions. Fed Gov. Daniel Tarullo speaks at the event at 1:45 p.m.
Republican House Speaker John Boehner delivers his own jobs speech at the Economic Club of Washington at 1 p.m.
Earnings reports are expected from Pier 1 before the bell and Research in Motion , after the close.
Questions? Comments? Email us at