This is what will get the market's attention

Investors will be sifting through a batch of data and the Fed's beige book on the economy Wednesday for any indications of whether the economy could be growing stronger than forecast.

There is the ADP report on private payrolls, expected to show slightly more than 220,000 payrolls, and the ISM nonmanufacturing survey, which includes an update on hiring in the services sector. Productivity and costs, for third quarter, are also reported. But the big story might be in the beige book, released at 2 p.m.

"Unless ADP is a huge outlier in either direction, it should really not drive the market. The beige book has potential especially after you heard the rhetoric from (Fed Vice Chairman Stanley) Fischer and (New York Fed President William) Dudley," said George Goncalves, head of rate strategy at Nomura. "They sounded upbeat. They believe their forecasts, and I'm sure they're getting input from the regions. They must feel confident that there's underlying strength in the economy and the beige book should reflect that."

Traders on the floor of the New York Stock Exchange, December 1, 2014.
Brendan McDermid | Reuters
Traders on the floor of the New York Stock Exchange, December 1, 2014.

On Monday, Dudley said the Fed could raise rates starting in mid-2015 but he also said the Fed would monitor the market reaction.

"I thought it was interesting Dudley said financial markets matter, too. They're worried about the transition," said Diane Swonk, chief economist at Mesirow Financial. "They want to get to the point of raising rates, but it could delay it, and it's going to be slow…It's going to be hard if inflation is running as tepid as it is."

Swonk said she will be watching the beige book to see if there are any signs of activity that could signal more inflation seeping into the economy. "It's at least a snapshot. What I'll be watching for is inflation expectations, wage gains. Are there pockets? You would think in some areas there have to some pockets of wage gains."

Several more Fed speakers are expected Wednesday including Philadelphia Fed President Charles Plosser at 12:30 p.m.; Fed Gov. Lael Brainard at 2 p.m. and Dallas Fed President Richard Fisher at 7:30 p.m.

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The ADP report is watched by traders as a potential signal for which way Friday's jobs report might go. Economists expect 230,000 jobs and an unemployment rate of 5.8 percent, when the government report is released.

Goncalves said if the employment data is strong this week, it should push the 10-year yield back towards 2.4 percent. It was at 2.29 percent late Tuesday.

Stronger-than-expected construction spending data Tuesday had economists penciling in new tracking forecasts for third-quarter GDP growth, to 4 percent, and for the fourth quarter, to 2.7 percent, according to CNBC/Moody's Analytics rapid update. November vehicle salesat a 17.2 million pacecould also bump up the fourth quarter further.

There are several earnings expected Wednesday, including Brown Forman, Abercrombie & Fitch and Aeropostale. The retailers will be watched for comments on holiday spending, as there is a very mixed picture so far.

Black Friday might have been a bust according to the National Retail Federation's report of an 11 percent decline over the weekend. But Comscore late Tuesday said Cyber Monday was a winner. It said there was a record one-day online spend of $2.04 billion, up 17 percent from a year ago.

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Energy shares surged, gaining 1.3 percent, as investors looked for bargains and traders chatted about potential oil patch mergers. Meanwhile, oil fell, with U.S. crude losing 3.1 percent to $66.88 per barrel, and erasing most of the gain from Monday.

The American Petroleum Institute late Tuesday reported a surprise drop in crude inventories of 6.5 million barrels for the week ended Nov. 28, according to reports. West Texas Intermediate oil futures rose more than a percent, above $67 per barrel, in late trading.

Traders will continue to be fixated on oil prices Wednesday. The government releases inventory and production data at 10:30 a.m. EST.

Stocks and oil oddly diverged Tuesday. The Dow jumped 102 points, or 0.6 percent, and the S&P 500 rose 13 points to 2,066 on the back of strong gains in energy stocks.

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The dollar index was higher, gaining 0.8 percent to 88.63.

"The most interesting thing this week is … the dollar is very strong today and you look at the screen yesterday, the dollar was weak. It's almost as if the market is reinforcing the notion that a strong dollar is now become more of a risk on trade which is counter to what we've been seeing almost the entire time since the financial crisis," said Julian Emanuel, UBS equity strategist.

Emanuel said it make sense given the relative positive strength of the U.S. economy and the fact the Fed is moving toward raising rates next year.