Currency volatility and oil prices could be two factors driving markets Wednesday, as traders also watch a big batch of U.S. economic data and earnings reports.
First up is ADP payroll data at 8:15 a.m. EDT, a kind of warm-up act for Friday's jobs report. There is also international trade and productivity and costs at 8:30 a.m. EDT. Services PMI is at 9:45 a.m. and ISM nonmanufacturing is at 10 a.m. Factory orders are also reported at 10 a.m.
Government oil inventory data is released at 10:30 a.m. EDT by the Energy Information Administration. API's inventory data, released after Tuesday's market close, showed a decrease of 1.2 million barrels of gasoline and 2.6 million barrels of distillates, but a rise of 1.3 million barrels of oil last week. Oil ended lower but gave back some losses after the API data. West Texas Intermediate closed at $43.65 per barrel, down $1.13.
Economists expect ADP to report 196,000 job, slightly below the total 200,000 nonfarm payrolls expected Friday in the government's jobs report. Last month, ADP reported 200,000 private sector job, while total nonfarm payrolls came in at 215,000.
There are also earnings expected from Time Warner, Royal Dutch Shell, Siemens, Priceline, A-B InBev, Human, Kate Spade and Virtu Financial, among others before the bell. Tesla, Transocean, Whole Foods and Kraft Heinz report after the close.
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The movement in currency markets will also be of interest after the dollar's turnaround during U.S. trading.
The dollar index was below 92 early in the day, and was at 93.10 in late trading. The dollar had weakened sharply against the yen and the euro, which hit a high of around 1.16.
"Today was an interesting day. The dollar started weak, and then had that big reversal," said Vassilli Serebriakov, currency strategist at BNP Paribas. "That could scare the market a little into taking profits in those dollar shorts. We could get a bit more of a squeeze into those numbers. The dollar could do okay into payrolls."
Serebriakov said he had had a target of 1.16 on the euro, and that the dollar's descent could now pause.
Scott Redler, a partner at T3Live.com, noted the dollar's reversal and said it could become a headwind for commodities.
"Now you even have some short term bottoming in the dollar, which could pressure commodities," he said, adding that commodities' gains had been a positive for stocks. Redler follows the stock market's short-term technicals.
As the dollar gyrated Tuesday, stocks were slammed and Treasury prices rose as markets reacted negatively to weak Chinese PMI data. The S&P 500 lost 18 to 2063, while the Nasdaq lost 1.1 percent or 54 point to 4763. The 10-year Treasury yield touched 1.79 percent.
Redler said the first sign of trouble in stocks came with earnings from big tech names, including Microsoft and IBM.
"Some of the cracks are knocking down pieces of the foundation here," he said. "Lots of sectors lost momentum…Does this corrective phase run deep or has it run its course? I'm seeing more faulty signals versus constructive signals."
The S&P 500 has broken through its 8- and 21-day moving averages, falling below them for the first time since late February.
"There were some signs before this when the QQQs (ETF) broke its ascending channel, or its 8-day and 21-day a week ago," he said. The Powershares QQQ ETF represents the Nasdaq 100. "Basically technology is leading us lower and that's not healthy for stocks."
There are also Fed speakers Wednesday. New York Fed Executive Vice President Simon Potter speaks at Columbia University at 10:15 a.m., and Minneapolis Fed President Neel Kashkari participates in a panel discussion on financial institutions and "too big to fail."