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On the Street, all eyes are on the numbers for oil

Oil will be key for Wall Street on Wednesday as the U.S. Energy Information Administration is due to report weekly crude oil inventories mid-morning.

U.S. crude oil futures held lower in late trade Tuesday after reports that the American Petroleum Institute's weekly crude inventory report showed a greater-than-expected build of 8.8 million barrels, according to StreetAccount.

On Tuesday, U.S. crude oil futures settled 7 cents lower at $41.45 a barrel. Earlier, WTI hit a new 2016 high of $41.90 a barrel, within $1 of its 200-day moving average of $42.55 a barrel. Oil hasn't traded above its 200-day moving average since July 30.


NYSE Trader on the floor
Brendan McDermid | Reuters

"As long as oil prices can stay in this range, it looks like the market is comfortable with (it) even if the supply is larger," said Quincy Krosby, market strategist at Prudential Financial.

"If it turns around and starts moving back into the 20s and 30s, you're going to see a turnaround in the market," she said.

The rapid recovery in oil prices from the multiyear lows touched in the last several weeks has supported gains in stocks — energy and materials are the top S&P 500 performers for the month so far.

U.S. stocks closed mixed Tuesday after opening lower amid news of explosions in Belgium that killed more than two dozen people. The Dow Jones industrial average ended 41.30 points lower at 17,582.57 and the S&P 500 declined 1.80 points to 2,049.80. Both indexes remained in positive territory year to date and about 4 percent below their 52-week intraday highs.

The Nasdaq composite outperformed with gains of 0.27 percent to 4,821.66. The index is still 3.7 percent lower for the year so far and 7.8 percent below its 52-week intraday high.

Trade volume was on pace for the second lowest of 2016, as of an hour after the close.

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More housing data is due Wednesday, with weekly mortgage applications expected ahead of the market open and February new home sales due later in the morning.

Most analysts said the housing market continues to support economic growth despite Monday's disappointing 7.1 percent drop in existing home sales.

"Housing prices have been pretty firm throughout all the volatility. Labor markets have been relatively strong," said Brett Wander, chief investment officer of fixed income at Charles Schwab Investment Management. "There's a number of places in the U.S. economy where things are pretty good."

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"It's ironic that back in January there was so much talk about a recession when fundamentals (didn't show that)," he said. "We'll see mixed data, see positive data, some less than positive data, but I don't believe we're on the verge of a recession."

Treasury yields reversed an initial decline Tuesday to edge higher, with the 2-year yield at 0.89 percent in late trade.

However, with the Federal Reserve reducing the number of projected hikes this year and expectations of moderate growth around the world, yields will likely have limited upside from here.

"Despite the fact that U.S. rates are as low as they are, they are lower globally and for that reason U.S. rates can't rise really all that much," Wander said.

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Nike will also be in focus during Wednesday's session. The stock, which is up 27 percent over the last 12 months, dipped in after-hours trade Tuesday after reporting fiscal third-quarter earnings of 55 cents that beat but revenue of $8.03 billion that missed expectations.

The firm also reported gross margin of 45.9 percent that was unchanged from the prior year. Global futures orders scheduled for delivery from March to July were 12 percent higher than orders reported for the same period last year, or 17 percent ex-currency changes, according to a press release.

Earnings due for release on Wednesday include General Mills ahead of the open and PVH, KB Home, Eldorado Gold and Oxford Industries after the close.

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— CNBC's Gina Francolla contributed to this report.