Dovish Fed may dominate stocks, not Alibaba IPO & Scotland vote

The biggest initial public offering ever prices Thursday, and traders expect Chinese e-tailer Alibaba to make a fairly smooth entry.

"I'm sure it will be fine. There's so much hype around it," said Peter Boocvkar, chief market analyst, Lindsey Group. "It's not crazy. It's not like a Facebook from a valuation standpoint. It's a lot of supply but I think, it's impacting the market for a couple of days." Alibaba prices after the close Thursday and begins trading Friday.

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Its current range of $66 to $68 per share, values the offering at as much as $21.8 billion.

Boockvar said more important to markets Thursday could be the message from Wednesday's Fed statement, and how the markets digest it after stocks traded higher Wednesday on continued Fed dovishness, while the dollar gained and bonds sold off on a more hawkish outlook for interest rates. "This huge discrepancy between markets is glaring," he said.

Read MoreBond market hears Fed hawks; stocks see doves

Traders will keep an eye on Scotland, where voters take to the polls Thursday to vote on whether to stay part of the U.K. or become a separate sovereign. Results will be available Friday morning.

Markets also turn their focus to other central banks Thursday morning, when the European Central Bank launches its latest lending program, the TLTRO–targeted longer-term refinancing operation.

Read MoreScottish vote could spook markets: Aberdeen CEO

Traders are watching to see how much European banks will borrow from the facility, and banks in Italy, Spain, Portugal and Greece are expected to participate. An estimated 150 billion euros is expected to be borrowed.

People walk through Alibaba headquarters in Hangzhou, Zhejiang Province, China.
Nelson Ching | Bloomberg | Getty Images
People walk through Alibaba headquarters in Hangzhou, Zhejiang Province, China.

Brown Brothers Harriman chief currency strategist Marc Chandler said peripheral European bonds rose ahead of the TLTRO, on expectations that banks would buy sovereigns. Yields on 2-year sovereigns across Europe have gone negative on buying ahead of the ECB. The success of the facility could also determine how the ECB structures its asset buying program, expected to be unveiled in October.

"The Scottish referendum is hanging over everything but especially the U.K.," he said.

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Alan Ruskin, head of G10 currency strategy at Deustche Bank said the market is pricing in a "no" vote for an independent Scotland, and the pound would immediately fall 3 to 4 percent if it were to pass instead.

"The market right now is pretty confident of a no vote even though the polls are very close," Ruskin said.

"Money going into the book makers in the U.K. is going 3 to 1 to the 'no' camp," Chandler said. If the vote passes, as expected, he said it would be a slight positive for sterling and U.K. stocks. Rates would also rise.

Also in Europe, the Swiss National Bank meets, and it could decide what action to take against the weak euro, as the euro trades close to its targeted 1.20.

There are several economic reports expected from the U.S. Thursday, including weekly jobless claims and housing starts at 8:30 a.m., and the Philadelphia Fed survey at 10 a.m. ET.

—By CNBC's Patti Domm