Investors eye oil swings, reaction on Greece

The relative resilience in the stock market on Wednesday despite negativity in oil and the euro zone encouraged analysts to expect more of an upside from any positive news on Thursday.

Stock market vacillation held to a tighter range than in previous days, save for the Dow's short-lived 100-point spike near the end of the session. It ended the day up just six points.

"I don't think in this entire cycle (we've had a day) where oil's been off and markets stayed (mostly) up," said Art Hogan, chief market strategist at Wunderlich Securities. "I think it's a testament to better economic data, ISM figures and auto sales."

Traders on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders on the floor of the New York Stock Exchange.

The ISM non-manufacturing index posted 56.7 for January, a slight increase from December as economic activity in the services sector grew for the 60th consecutive month.

Ending their best two-day gain of the year, the S&P 500 and the Nasdaq closed mildly lower on Wednesday on news that the European Central Bank revoked a waiver that allowed banks to use Greek government debt as collateral for loans. Of the major U.S. indices, only the Dow Jones industrial average managed to close higher by 0.04 percent.

"So many banks are invested in emerging market (Greek) bonds with 10 percent yields," said Lance Roberts, general partner at STA Wealth Management. In the past, the thinking was that "there's no fear of buying junk debt because somebody's going to bail me out."

Read MoreECB: Banks can't use Greek debt as collateral

Still, he wasn't that concerned about the Greek news. "I think it has to be a very significant piece of news to move markets," he said, noting the extreme directions the ECB/Greece negotiations could take and their relative unlikelihood.

To be sure, going into the open Thursday the Greek news and any similar developments overnight will likely affect the market negatively, said Uri Landesman, president at Platinum Partners. If there is a major move in oil, that will be more important than earnings or U.S. economic data, "unless there is something really weird."

Earlier on Wednesday, stocks were slightly pressured from a plunge in crude oil futures, which settled down nearly 9 percent below $49 a barrel, erasing almost all the big gains from the past two days.

WTI crude (March '15)

The energy sector was the hardest hit on the S&P 500, and Caterpillar, Chevron and Exxon Mobil all closed in the red.

The "perception is that oil has found a bottom, not that it won't still fluctuate," said Peter Cardillo, chief market economist at Rockwell Global Capital. He said oil should stay within a $45 to $55 range for now.

Read MoreOil whipsawed on supply glut

Wednesday's performance could indicate that nonenergy equities are set to perform well, some analysts said.

"U.S. companies that have just gone through the economic crisis have really cleaned up their act to become more profitable in the last two years," said Phil Quartuccio, CEO of Illustro Trading. "As an investor, I only see an upside."

Disney jumped as much as 8 percent on Wednesday to a new high following a blowout earnings report after the bell Tuesday. Consumer discretionary also led gains on the S&P.

Economic data out on Thursday include the Challenger Job-Cut report at 7:30 a.m., international trade figures at 8:30 a.m., weekly jobless claims at 8:30 a.m., productivity and costs at 8:30 a.m. and natural gas inventories at 10:30 a.m.

Outside of major beats or misses, the reports are secondary to Friday's highly anticipated nonfarm payrolls number and employment data.

A large number of companies will report on Thursday in the tail end of the earnings season, including Philip Morris before the bell and Twitter after the bell.

However, analysts said that earnings would likely make little impact as the bulk of companies have already reported and set the tone for this season.

"The feeling is lots of companies have come in below expectations," said Robert Pavlik, chief market strategist at Banyan Partners. We'll have "more of the same until we get out of this earnings season and we can focus on an improving economy."

And with the economy comes questions about signals the Federal Reserve may use to determine the timing of an interest rate hike.

The Cleveland Federal Reserve's president, Loretta Mester, a nonvoting member of the Fed, said on Wednesday that the U.S. economy is on course for a rate hike by June.

Roberts said the rate hike comments from Mester and other Fed speakers over the past two days were tests for market reaction ahead of an actual interest rate raise.

Read MoreBuffett: Fed rate hike not feasible

The U.S. 10-year yield continued to recover from Monday's lows but leveled off just under 1.80 percent. With those movements, analysts said they preferred equities as they weren't certain if the yield moves were from foreign inflows or a reflection of the U.S. economy.