Market Insider

Stage set for another volatile trading day

Fed faces inflation fears

Fed speak may trump a bundle of big earnings reports and important housing and industrial production data Wednesday, all of which guarantees another volatile trading day.

Traders are also focused on Ukraine, as Kiev attempts to move against pro-Russian militants, and headlines from there ruffled markets Tuesday. U.S. industrial output and retail sales, set for release early Wednesday, could also have a lingering impact on markets. Earlier Wednesday, China reported better-than-expected first quarter gross domestic product numbers, with economists forecasting a growth pickup over the coming months.

Read More China GDP puts to rest worst fears over the economy

There are a number of Fed speakers Wednesday, but the most important by far is Fed Chair Janet Yellen, who speaks to the Economics Club of New York at 12:25 p.m. ET. Yellen will also answer questions from economists.

Trader on the floor of the New York Stock Exchange.
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"She's clearly taken a beating in the press. She's going to try not to say anything," said Ian Lyngen, senior Treasury strategist at CRT Capital.

Lyngen was referring to a comment Yellen made at her first press briefing after the Fed's March 19 meeting. She said that the Fed could begin to hike short term rates about six months after it ends its bond buying program. That sent a ripple through markets, as traders repriced for higher rates sooner than they had expected in 2015.

The Fed has emphasized since then – even in the minutes from the March meeting – that it intends to keep rates low for longer. Yields have fallen across the curve since those minutes were released last week.

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Besides Yellen, the Fed's beige book on the economy could be important when it is released at 2 p.m. ET.

There are also housing starts at 8:30 a.m. ET and industrial production at 9:15 a.m.

Fed speakers include Fed Gov. Jerome Stein, who speaks at the Federal Reserve Bank of Atlanta Conference on financial stability and monetary policy at 8:30 a.m.

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Atlanta Fed President Dennis Lockhart also makes comments at the Fed conference at 11:30 a.m., and separately, Dallas Fed President Richard Fisher speaks on the regional economic outlook in Austin, Texas at 1:25 p.m.

Earnings deluge

Earnings could also be a force for stocks in the morning, with Bank of America reporting ahead of the bell. Credit Suisse, Abbott Labs, US Bancorp, St. Jude Medical and PNC Financial also report. After the closing bell, Google, IBM, American Express, Capital One, Kansas City Southern and Noble report.

Intel's after hours earnings report Tuesday could be a catalyst for tech Wednesday. Intel earnings fell 4.8 percent, as a result of the decline in PCs. But its stock rose 0.9 percent in afterhours trading after it gave a fairly upbeat forecast, showed margin improvement and growth in new businesses, like the Internet of Things, a term encompassing wearable device products.

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Markets were highly volatile Tuesday, with stocks swinging between gains, losses and ending with gains. The 10-year yield dipped below the key 2.60 percent level Tuesday afternoon while stocks sold off. It recovered as the stock market reversed declines in afternoon trading. But traders are watching for another dip below 2.60 percent, the bottom of a trading range it has been in since January.

A lower yield would be a signal of a flight-to-safety trade, possibly as a result of uncertainty about the Ukraine, or it could be concerns about the strength of the economy. Traders say regardless of what moves it, if it does seriously breach 2.60, stocks and the dollar will fall. The 10-year was at 2.63 percent late Tuesday.

The Nasdaq, down nearly 2 percent at one point, was 0.3 percent away from a 10 percent correction from its March 6 high. The Nasdaq was whipped by momentum stocks and ended the day up 11 at 4034. The S&P 500 was up 12 at 1842.

Read MoreBehind stocks' whippy behavior

Traders are also watching the IPO market as an important measure for confidence. A number of IPOs were set to begin trading Wednesday, including Moelis, which downsized its offering and priced below its range. Several others are set to price Wednesday including the Chinese Twitter-like platform Weibo, Leju Holdings, Sabre, Sportsman's Warehouse, and Vital Therapies.

—By CNBC's Patti Domm. Follow her on Twitter @pattidomm.