Will oil rally have legs as JPMorgan reports?

JPMorgan Chase earnings and March retail sales could set the tone for Wednesday's markets, but traders will also be keeping an eye on oil prices.

Crude rallied hard during Tuesday's session, but gave up some gains in electronic trading when the American Petroleum Institute released its weekly report showing a large, 6.2 million barrel increase in supply. That could make the U.S. Energy Information Administration release of weekly data Wednesday an even bigger than normal event.

The 10:30 a.m. EDT release includes weekly inventory data but also U.S. production figures, hovering around 9 million barrels a day. Analysts have said the market could get a psychological boost if production falls below 9 million barrels.

Oil's rise Tuesday was dramatic with West Texas Intermediate settling up 4.5 percent to $42.17 per barrel, its highest close since November. WTI also ended above its 200-day moving average for the first time since July 30, 2014. Crude futures were higher in early trading, but jumped after Interfax reported that Russia was hopeful for a production freeze deal and that the final decision would not depend on Iran.

Stocks shook off their doldrums Tuesday, and the Dow snapped higher in its biggest daily gain in a month. The blue chip index climbed 164 at 17,721, and the S&P 500 rose 19 to 2,061.

The S&P energy sector jumped 2.8 percent.

Retail sales and PPI are reported at 8:30 a.m. EDT Wednesday, while business inventories are at 10 a.m. and the Fed's Beige Book on the economy is released at 2 p.m. March Retail sales are expected to be flat, but up 0.4 percent when auto sales are not included.

JPMorgan Chase is expected to report first-quarter earnings per share of $1.26 per share, according to FactSet.

"That's the first real company to report that has its tentacles into other companies. It gives you a read on the housing market. It gives you a read on investment banking. It gives you a read on loan demand and it gives you a read on the consumer," said Art Hogan, chief market strategist with Wunderlich Securities.

Financials were also higher Tuesday, rallying 1.3 percent ahead of the start of earnings. Traders said the banks rose ahead of results, but also on higher energy prices as there's been concerns about the sector's exposure to energy loans.

"People get nervous and they've been set up short, coming into the (earnings) prints," said Hogan. "They're saying let's get out in case there's an upside surprise. There is also another cohort of investors who say we've way overestimated the negatives in the financials."

Other earnings are expected from Commerce Bancshares and Pier 1 Imports.