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Oil, global issues remain in focus

With apparent settlement ahead for the monthslong tension between Russia and Ukraine, investors will keep an eye on oil and further developments in Greece ahead of expected announcements on Monday.

"Don't worry about Greece," said Douglas Cote, chief market strategist at Voya Investment Management. "They're going to pay their bills (and) institute structural form. They're trying to change things but they can't." He pointed out that the country, which is trying to extend the terms of its bailout program with the euro zone, makes up just 2 percent of the union.

Headlines pointing towards some kind of deal that will keep Greece in the euro zone continues to trickle out of Brussels, although no official news is expected before Monday.

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

On Sunday, Russia is expected to enter a cease-fire with Ukraine as announced early on Thursday, a move that sent European and U.S.stocks higher.

To be sure, markets still face uncertainty over the permanence of the cease-fire and fighting in the few days left before the deadline, said Art Hogan, chief market strategist at Wunderlich Securities.

WTI crude oil ended a two-day losing streak by closing up 4.9 percent at $51.21 a barrel on the New York Mercantile Exchange. Energy was the third-best performing sector on the S&P 500.

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"I think we need to hold $50 in order to hold that upside," said JJ Kinahan, chief derivatives strategist at TD Ameritrade.

Cheap gas did not help the consumer as much as economists had expected, with retail sales coming in mostly weaker than forecast on Thursday.

"Increased consumer spending is a function of increases in income, not savings," Lance Roberts, general partner at STA Wealth Management, said in a note.

However, the core figure ex-autos and gasoline sales showed a 0.2 percent increase for January, up from a revised 0.3 percent drop in December.

In another disappointment, weekly jobless claims came in above expectations at 304,000.

U.S. stocks shook off the lackluster data and closed significantly higher and continued to hold in the black for the year. The Dow Jones industrial average closed up at 17,972.38,with Cisco leading gains and American Express the greatest of six blue chip laggards. The S&P 500 closed up at 2,088.45, with materials leading gains and utilities and telecommunications the only two laggards. The Nasdaq closed up 56.43 points, or 1.18 percent, to 4,857.61, its highest level since March 2000.

"Retail and unemployment data (were) basically not weighing on investment sentiment today," said Peter Cardillo, chief market economist at Rockwell Global Capital. He noted that the Nasdaq reaching new 52-week highs on Thursday and the S&P closing at its highest level for 2015 were good indications that the market rally would continue, even putting the S&P above 2,125 points next week.

Friday closes out the light data week with import and export prices at 8:30 a.m. and consumer sentiment at 10 a.m.

Analysts polled by Reuters expect a 0.9 decline in U.S. export prices in January and a 3.2 percent drop in import prices, for a likely seventh-straight month of declines.

J.M. Smucker, maker of Folgers Coffee and fruit spreads, is one of a handful of companies to report earnings before the bell on Friday.

The Federal Reserve Bank of Dallas President Richard Fisher is scheduled to speak in the early afternoon.

As the hawkish Fed official will retire next month, "What he says right now should be taken with a large grain of salt," Hogan said.

Fisher told CNBC's "Power Lunch" on Thursday that the Fed should raise rates this year.

Despite last Friday's strong jobs report and comments from other Fed officials that called for an interest rate hike sooner rather than later, several analysts said economic conditions should push back a rate hike to at least the second half of the year.

Sweden lowered interest rates on Thursday and announced a 10 billion kronor ($1.2 billion) bond-buying program while the Bank of England hinted a rate hike could come next year.

If you look beyond the U.S. economy, most central banks are accommodative, Voya's Cote said. "If you want to be in this market, you want to be globally diversified."

Finally, while the VIX and bond yields moved lower on Thursday, TD Ameritrade's Kinahan said investors should keep an eye on the two risk factors.

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"If they (VIX and bond yields) start moving up together for no apparent reason, that's something to look at," he said.