After the steep drop in homebuilder sentiment in February, Wednesday's housing starts report could have more impact than usual.
As economists sift through data to separate the weather impact from other possible causes, the National Association of Home Builders survey raised a red flag. The headline dropped 10 points to 46, its lowest level since May. There were large declines in key elements of the report; present sales fell 11 points to 51, while sales expectations were down six points at 54. Prospective buyer traffic, clearly a possible weather impact, was off nine points at 31.
January housing starts, reported at 8:30 a.m., are expected to decline 4.9 percent to 950,000, and building permits are seen falling 1.1 percent to 980,000.
Stocks took the home builders report in stride, with the closing up 28 points at 4272, its eighth consecutive rise. The , dragged down by Coke, fell 23 points to 16,130, and the S&P 500 was up 2 points at 1840.
Against the backdrop of weaker housing data, the minutes of the Federal Reserve's last meeting will be released at 2 p.m. ET. At that meeting, the Fed decided to trim another $10 billion from its monthly bond purchases, bringing monthly purchases to $65 billion. The meeting was the last for former Fed Chairman Ben Bernanke, and new Fed Chair Janet Yellen has since indicated that the Fed expects to continue tapering its bond program.
(Read more: 'Severely unaffordable' housing markets of 2014)
Only a significant change in the economy would alter its path, Yellen said. During her Congressional testimony last week, Yellen also said that it's too soon to tell what is causing the slowdown in hiring, noting weather could have impacted the last two monthly jobs reports.
"It will be interesting to see if they comment on the speed of tapering - whatever would lead them to speed up or slow down or whatever," said Stephen Stanley, chief economist at Pierpont Securities. "The FOMC (Federal Open Market Committee) minutes always seem to be a big market mover. You would think that would be less so in the immediate aftermath of her testimony."
Yellen testified on the economy before the House Financial Services Committee last week.
(Read more: Yellen's dovishness soothesstocks)
"I wouldn't fade the idea that it will be a market mover. Some little tidbit in there that people weren't anticipating or something innocuous that someone misinterprets. Somehow, some way, you might expect there to be a market reaction," said Stanley. "The minutes are the only place the hawkish minority gets a voice."
Besides housing data, the producer price index is due at 8:30 a.m., which will give investors their first look at the government's changes to the measure. For the first time, the inflation series will include services and construction, and headline PPI will now be called PPI final demand, instead of PPI for finished goods.
There are also a few key earnings due Wednesday including Anglogold Ashanti, Devon Energy, Carlyle Group, MGM Mirage and Health Care REIT, before the open. After the close Tesla Motors, Iamgold, Questar, Sunoco Logistics Partners, Marriott, Flowserve, Williams Cos, Jack in the Box, LifeLock, and Regency Energy report.
—By CNBC's Patti Domm. Follow her on Twitter @pattidomm.
Correction: An earlier version of this story included an incorrect figure for the Fed's monthly bond purchases. The correct figure is $65 billion.