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Data deluge set to hit the Street

Stocks could continue to trade sideways Wednesday as traders eye geopolitics and some major indicators about the U.S. economy on the last full trading day of the holiday week.

A slew of economic data is scheduled to hit Wednesday morning. Markets are closed Thursday for Thanksgiving Day and the stock market closes at 1 p.m. EST on Friday.

"I think we're looking at the headlines overnight and the data in the morning. It seems like we obsess about the headlines until we get the data," said Jack Ablin, chief investment officer at BMO Private Bank. "So I think the bottom line, it's all about the data."

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

Key for Fed watchers is the central bank's favored inflation gauge, the PCE deflator in the personal income and spending report due at 8:30 a.m. Economists polled by Reuters expect a monthly rise of 0.1 percent for October.

"I do think tomorrow's data can be market moving if it's strong," said John Canally, investment strategist and economist at LPL Financial.

He said investors might take a risk-off approach if the data supported a quicker pace of Fed tightening after the first rate hike, which Wall Street increasingly believes will come when the central bank meets Dec. 15-16.

"The market is OK now with the December hike and the dots coming down, but they're not OK with the December hike ... and five or six hikes next year," Canally said.

Oil will also remain in focus with crude and natural gas inventories both due Wednesday. Energy stocks led advancers Tuesday and helped the major averages close mildly higher despite earlier declines on morning news of a downed Russian warplane near the Syrian border.

The S&P 500 ended 2.55 points higher at 2,089.14, while the Dow Jones industrial average gained 19.51 points to 17,812.19. The Nasdaq composite eked out a gain of 0.33 point to 5,102.81.

"I think the markets are in the mindset here, unless there's some substantial news coming out of Russia/Syria ... it feels like we're kind of in a holiday period unless we get something out of the normal. … As we move towards that Dec. 16 line in the sand, markets are going to get jittery," said Daniel Deming, managing director at KKM Financial.

"I'm pretty impressed by the market's ability to fight off the news items of the last 24 hours," he said.

Treasury yields were little changed throughout the session, with the two-year yield at 0.93 percent late Tuesday and the 10-year yield at 2.24 percent.

The durable goods report and weekly jobless claims are also scheduled for release at 8:30 a.m. Economists polled by Reuters expect durable goods to reverse September's decline with a gain of 1.5 percent, while the nondefense, ex-air figure is projected to rise 0.4 percent.

Ryan Sweet, director of real-time economics at Moody's Analytics, expects only a mildly positive reversal in durable goods orders as manufacturing struggles remain "a substantial drag on growth."

Still, he expects a strong showing from consumer spending and housing-related areas due to pent-up demand.

Data on the housing market on the calendar for Wednesday include weekly mortgage applications at 7 a.m., the FHFA home price index at 9 a.m. and new home sales at 10 a.m.

Traders will also get another look at the consumer with the University of Michigan's final read on November consumer sentiment due at 10 a.m. On Tuesday, the Conference Board's consumer confidence index missed estimates and declined for a second straight month in November to 90.4.

The Treasury is scheduled to hold a seven-year note auction Wednesday. The only major earnings report expected is Deere, before the bell.