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"In light of more recent data, it's got to put them in a nervous mode, and I think that's what Dudley is saying: 'We'll see,' " said David Ader, chief Treasury strategist at CRT Capital. "Dudley is being a little more contingent based on what he's been saying in the last couple of weeks. I do think that's important."
Besides the data, there are also several earnings, including General Electric and Honeywell. Comerica, Kansas City Southern, SunTrust and Synchrony Financial also report ahead of the market open.
Michael O'Rourke, chief market strategist at JonesTrading, said that so far earnings season is not impressing him. According to Thomson Reuters, 74 percent of S&P companies already reporting beat earnings estimates at a pace of 74 percent. But only 49 percent have beaten revenue forecasts, while 51 percent have missed revenue targets.
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"Economic data really has to surprise to the upside to make a meaningful dent," O'Rourke said. "It looks like Q3 GDP is going to be a bust. That's the problem. There's so many negatives, it's easy to get negative." O'Rourke said short covering was a factor behind Thursday's move higher in stocks.
Economists have been paring back GDP forecasts for the third quarter this week, and the average forecast is now for about 1.7 percent growth, according to a CNBC/Moody's Analytics survey.
"I don't expect any of those data points over the next few weeks to come out massively strong," said Jim Caron, fixed income portfolio manager at Morgan Stanley Investment Management. "I think we have to live through a period right now of softish data that's not going to necessarily make it obvious the Fed has to hike."
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Caron sees a 50/50 chance of a Fed rate hike in December, while the market is pricing in just a 1-in-3 chance.
"I think the odds are higher that the Fed moves in December than what the market price actually suggests. I think the Fed does inherently want to go," he said. The Fed must see stabilization of financial markets and the data has to be strong enough, but it won't be clear for several weeks whether the softness is temporary.
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He said a key time will be when the market starts to see clean data for the fourth quarter, that does not reflect the summer's weakness of financial markets. "We're not going to get fourth-quarter data really until November. Even then, there will be overhang weakness from September into October. So you might not get a real look until November, early December … and then they're going to formulate their opinion on as to whether they should move or not," he said.
The Fed meets Oct. 28 but is not expected to take action. The December meeting is on the 16th.
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