Still looking for a deal in Greece, US data

Europe will take central focus on Thursday, as investors take in the latest developments on the Greek-euro zone standoff while eyeing U.S. data.

Greece was unable to reach a deal with the European Union to stay in an EU bailout program, the Eurogroup's Jeroen Dijsselbloem said on Wednesday, noting talks will continue on Monday.

Earlier, futures and Treasury bond yields climbed following a report that Greece and its creditors had reached an agreement in principle.

"There's going to be a lot of noise, people saying things," said Bryan Turley, managing director of investment banking at MLV. He noted that each source would be driven by a bias to a national agenda.

"Watching the EU deal with Greece is a little bit like watching a family deal with a family member with an addiction problem," said NYU Stern professor Aswath Damodaran. "Each time the family member enters a rehab, we have a party to celebrate, only to be disappointed again. So, the markets may be celebrating a temporary reprieve but unless the fundamentals change, it will be short lived."

The euro turned positive on the after-hours Greek resolution news, and the U.S. 10-year Treasury note yield ticked higher.

U.S. stocks closed narrowly mixed following a choppy day of trading on Wednesday, as investors continued to watch for developments in negotiations between Greece and euro zone finance ministers.

Earlier on Wednesday, the Dow Jones Industrial Average fell 109 points before closing about 7 points lower at 17,862.14, with Cisco the greatest decliner and Goldman Sachs the greatest of 12 blue chip gainers. The S&P 500 closed down 0.06 points, or 0.00 percent, at 2,068.53, with utilities leading six sectors lower and consumer staples the greatest advancer. The Nasdaq closed up 13.54 points, or 0.28 percent, to 4,801.18.

While all eyes have concentrated on Greece for the last two weeks, Jim Nelson, portfolio manager at Euro Pacific Capital, reminded investors to look at the larger European story.

"For U.S. investors, the most important thing to focus on is the European Central Bank and the implications of the quantitative easing program for the euro zone," he said. "You definitely want to stay with the euro zone … for the short term. I think ultimately the global economy begins to slow."

On the domestic front, U.S. data and a few key earnings reports will be in focus on Thursday.

"Greece was the only drag on the market from last Friday's unemployment report," said John Caruso, senior market strategist at RJO Futures. "Good or even average data tomorrow should be good enough to propel the market higher."

The biggest economic data point for the week, retail sales, comes out at 8:30 a.m. on Thursday. Analysts polled by Reuters expect a decline of 0.5 percent in sales for January, up from December's decrease of 0.9 percent.

With January traditionally a weaker month for retail sales following the holiday season, analysts said declines would not faze them.

"I don't think it really changes the fact that it's just a matter of time before consumers begin spending at a faster rate (due to low oil)," said Peter Cardillo, chief market economist at Rockwell Global Capital.

Weekly jobless claims at 8:30 a.m. will also shed light on the employment situation post-Friday's strong jobs report.

The question is, "is the slowdown in energy, is that going to be less than the increase in other areas?" said Kim Forrest, senior equity analyst at Fort Pitt Capital.

Halliburton was the latest of the oil giants to report on Tuesday that it would cut up to 8 percent of jobs.

Oil continued to trade sideways, closing down 2.4 percent at $48.84 a barrel after the Energy Information Administration reported that inventories for the week rose to 4.9 million barrels.

In other corporate news, Tesla unexpectedly reported a quarterly loss after the bell on Wednesday, but shares rose in after-hours trade on better-than-expected shipments.

Among the few remaining companies yet to post earnings, Dr Pepper Snapple and Kellogg report before the bell on Thursday, while AIG, Kraft Foods and Groupon report after the bell.

Seasonality may also help markets on Thursday, as discussions over Greece continue into Monday and the next week.

"The market is usually strong before a long weekend, and removing that uncertainty should see a strong finish for the week," said Marc Chaikin, CEO of Chaikin Analytics. He said renewed confidence should "propel the market to new highs in the 2,100 area for the S&P 500."