Inflation data out Friday morning will be key for markets trying to project the path of Fed tightening. Investors will also continue to look for signs of stabilization in oil prices.
The Federal Reserve's preferred measure of inflation, the price index of personal consumption expenditures that excludes food and energy, is due at 10 a.m. ET.
"I've been in agreement with the market that inflation's dead, but that's old fashioned," said Bryce Doty, senior fixed income manager with Sit Investment Associates. Fed Chair Janet "Yellen sees come August, the year-over-year comparisons on oil are going to get tougher. Inflation is going to appear in a rising trend."
Read More Stock picks to survive an economic downturn
The January PCE report also includes data on personal income and consumer spending. Also scheduled for Friday morning is the release of final consumer sentiment for February.
"If we see any pickup in spending that would lead the market to close the week higher," said Peter Cardillo, chief market economist at First Standard Financial.
All components of the PCE data are expected to show a slight rise month over month, while sentiment should hold steady from the previous 90.7 print. A miss in consumer confidence earlier this week weighed on U.S. stocks.
Due at 8:30 a.m. is the second read on fourth-quarter GDP, which is expected to come in slightly softer than the initial 0.7 percent read. The trade deficit for January is also expected at 8:30 a.m.
Read More Recession sign is in play and has 81% accuracy
As stocks remain closely correlated to oil, the weekly U.S. oil rig count could add to increasing signs domestic oil production is dropping. The data would follow Thursday's report that the Venezuelan oil minister Eulogio Del Pino said he'd reached an agreement with Russia, Saudi Arabia and Qatar on the need for a mid-March meeting.
Oil prices reversed on the news to settle nearly 3 percent higher at $33.07 a barrel, helping push stocks to close at session highs Thursday.
The Dow Jones industrial average closed up 212 points at 16,697.29, while the gained 1.13 percent to close at 1,951.70, topping the 1,950 resistance level with financials leading gains.
Treasury yields held lower throughout the session, however, with the 2-year hovering just above 0.73 percent and the 10-year at 1.72 percent in late trade Thursday. A seven-year note auction originally scheduled for Thursday afternoon was also delayed to 11:30 a.m. Friday due to a "technical issue," the Treasury said.
Read More Treasury official: Puerto Rico needs US help NOW
Traders were not fazed by the news, but generally said the drop in yields was a little overdone.
"Unless tomorrow's really strong (on PCE) and we get a strong jobs number in March and the market has a convincing reversal in the short term, you're going to have a Fed (like in September) not confident enough in March" to raise rates, said Brandon Swensen, co-head of the fixed income desk at RBC Global Asset Management.
"Our view is the market has probably swung a little too far but given what's happening globally and what continues to happen in the energy and commodities space, the sentiment coming from oil and China, we're still in a similar range that we've been in," he said.
Read MoreStore closings signal big change at Kohl's
While expectations for the bulk of U.S. data due Friday point to support for stocks, overseas news remains the wild card.
"We are still in a very fragile market," said Athanasios Vamvakidis, head of G10 FX strategy in Europe at Bank of America Merrill Lynch. "There are many market concerns about a number of risks at a time the market (has less) belief central banks will come to the rescue."
Those include a potential "Brexit" and negative impact from a sharp slowdown in China's economy. While the country's financial markets are not necessarily an indicator of growth, traders are watching how authorities manage the situation.
On Thursday, developed market stock indexes shook off a 6.4 percent plunge in the Shanghai composite to close more than 1 percent higher.
"It surprised me that didn't spill over into U.S. markets, but I think what that (decline in Shanghai) was was some profit taking, so I will see tonight," said David Schiegoleit, managing director of investments at U.S. Bank Private Client Reserve.
Markets could also react to headlines from the G20 meeting held in Shanghai over the next two days, especially indications of coordinated policy efforts.
Read MoreApple: Court order violates 1st Amendment
However, most analysts are skeptical. Vamvakidis said historical precedent shows less inclination for the leaders to act in accord unless "things are very, very bad, and we're not there yet."
Market volatility and global economic slowdown are expected to be key topics of discussion. Investors are also watching closely for indications on how China is managing its currency.
The People's Bank of China's midpoint fix for the yuan against the dollar has held relatively steady since sharp weakness at the beginning of the year and late August that sent global markets rolling.
"The Chinese authorities ahead of the meeting, they have managed to stabilize the currency. It remains to be seen whether after the meeting if that will be the case," Vamvakidis said.
Correction: This story has been updated to reflect that personal income and consumer spending data was due for release at 10 a.m.