Investors have been anticipating Friday's U.S. October employment report; even though it will be skewed by the partial U.S. government shutdown in October, it could signal how close the Federal Reserve is to tapering its quantitative easing program.
Many Fed watchers don't expect the Fed to start paring back its $85 billion in monthly bond purchases until early next year. "If [the ECB's Draghi] does cut, I think the euro drops to 1.34 and then if you get the compounding effect of good U.S. data on Friday, it's realistic to think of 1.33 euro, which would be beneficial to the euro zone."
The Dow Wednesday rose 128 points to a new closing high of 15,746, and the S&P 500 was up 7 points at 1770, but the Dow Transports, the Nasdaq and Russell 2000, which had been leading the market, all traded lower. Momentum names sold off, led by car maker Tesla, which lost 14.5 percent after disappointing sales Tuesday. Priceline and Netflix were both lower on the day.
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"A lot of those names that are under pressure are the big winners of the year," said David Lutz, head of ETF trading strategy at Stifel Nicolaus. Lutz said some investors were clearing the deck, selling stocks to invest in the gusher of IPOs this week, including the big one – Twitter.
"If this was a pure rush for the exits, I would have anticipated value to be really outperforming growth," he said, noting that value stocks were only slightly ahead. Investors did put funds into the defensive telecom and utilities sectors, both of which have lagged the S&P's 24 percent year-to-date gain. The consumer staples sector was also a leader Wednesday, though it is up 22 percent for the year.
Art Cashin, director of floor operations at UBS, said there have been odd divergences in the market, but he does not see it caused by selling by IPO buyers. "The Russell and Nasdaq were coming under pressure for the last two weeks. People may be moving into safety," he said, adding fewer stocks are leading the market higher.
Twitter's opening trade is much anticipated; some traders expect it to just trade a few dollars higher, but there was talk that heavy demand for the stock could cause it to soar. The offering of 70 million shares was priced at $26, just above the $23 to $25 range but below the $27, $28 talk earlier in the day.
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"I think it will open up $4, or $5 or $6 dollars, something like that," said Steve Massocca of Wedbush Securities, adding he doesn't expect the stock to see a huge burst higher when it opens. "I think it's too big and there's too much stock."
According to Renaissance Capital, the average first day pop in initial public offerings is 17 percent this year.
Birinyi Associates examined post-IPO trading in internet companies' stocks. For the investors that bought when the stock first opened for trading, the performance has been disappointing. Birinyi analysts note that since 2011, internet IPOs have traded lower 62 percent of the time and in their first six months, they have lost an average 8.6 percent from the opening trade. Only 41 percent of these issues are currently outperforming the S&P 500.
According to Birinyi, LinkedIn is one of the few that moved higher in the first week, gaining 13.7 percent. Facebook was down 21.5 percent in its first week, and Zynga fell 13.9 percent in the first week.
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Massocca disagrees with those who say Twitter may represent a market top though he does expect the market to pullback by as much as 7 percent. "It's a highway marker on the way to the top," he said. The market hasn't made much progress moving higher since summer, even though it has seen new records, he added.
"I just think the market is expensive. Stocks are expensive. They're expensive as a multiple of earnings. Earnings season was okay, not great. Odds are we have some kind of correction here in my opinion," he said.
Besides the excitement around Twitter, traders will be watching a bunch of earnings reports before the bell. Companies due to report include Siemens, AMC Networks, Wendy's, Apache, Arcelor Mittal, International Game Technology, Scripps National Interactive, Tim Hortons, Calpine, Scotts Miracle-Gro, Gartner, Foster Wheeler, and Beazer Homes. Companies due to report after the close include Disney, Priceline.com, Groupon and Great Plains Energy.
Among economic reports expected on Thursday are jobless claims and third quarter Gross Domestic Product (GDP), both at 8:30 a.m. GDP is expected to show just 1.6 percent growth, and 335,000 claims are expected.
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Cashin said the claims could be trouble if they don't show the expected decline. "They may not drop as low as some people think they will," he said. Claims have been distorted by computer troubles in California.
—By CNBC's Patti Domm. Follow here on Twitter @pattidomm.