×

Look to the consumer's mood ahead of the Fed

Retail sales and consumer sentiment Friday morning will provide one last look at the mood of consumers, before Fed officials meet next week to consider a rate hike for the first time in nine years.

There is also the Producer Price Index, inflation data at 8:30 a.m. ET, and business inventories at 10 a.m. ET. PPI is expected to be flat, and consumer inflation data, CPI, is released Tuesday.

Read MoreFed worries auto industry may feel most heat from rate hike

"I think retail sales and CPI are the two main reports. We have six or so other indicators. It's pretty hard to see the data coming enough to swing their decision," said J.P. Morgan economist Daniel Silver. The Fed is widely expected to vote to hike its target fed funds rate when it meets Tuesday and Wednesday, and J.P. Morgan expects four more hikes next year.

A trader works on the floor of the New York Stock Exchange.
Getty Images
A trader works on the floor of the New York Stock Exchange.

Silver said retail sales should be up 0.3 percent, and up 0.1 percent when excluding auto sales. "Auto sales have been strong in the past few months. Between October and November, there wasn't much incremental change," he said.

Vehicle sales have been a strong spot in the economy, running at an annual rate above 18 million, and they are seen as one part of the economy that could be sensitive to higher rates.

Stocks rose Thursday after three rocky sessions. Even though U.S. oil futures fell below $37, stocks delinked from oil after following it closely in recent sessions. The beaten-down S&P energy sector bounced to be the second-best performing major sector, up 0.6 percent Thursday. The S&P 500 rose 4 points to 2,052.

Read MoreThe oil companies that could be in big dividend trouble

West Texas Intermediate crude futures lost 1.1 percent to settle at $36.76 per barrel, while Brent crude futures closed down 1 percent at $39.73, the lowest close for both since February 2009.

"Energy is the area of the market that gives us the most concern. If we get pulled lower in the first quarter, I think it's going to be the main driver of the weakness, and it looks like energy is rolling over again," said Ari Wald, technical analyst at Oppenheimer Asset Management. Wald said the best-case scenario would be if oil and commodities were in a bottoming process.

But oil could be a problem if it's not nearing a bottom. "There's always one culprit. Let's put our bear caps on. It was the banks in 2008. It was tech in 2000. … Energy is the cycle's big loser. If the market cracks here, this is what is going to bring it lower. You're seeing it in the credit spreads," he said.

Read More Natural gas burned by weather; no rebound seen