"We're going to have to learn a lot more [about the economy]. And are we going to learn it before the election? Doubtful," said John Briggs, head of strategy at RBS. Briggs said RBS' reading of market expectations on Fed rate hikes showed a swing back to about a 50/50 chance for December, after a sudden pop to a 64 percent chance ahead of the Fed minutes Wednesday.
The market was setting up for a hawkish statement, after New York Fed President William Dudley said in a Fox interview Tuesday that the Fed could raise rates soon, even in September. That sent short-end Treasury yields higher, and the two-year was rising even into the 2 p.m. announcement. The two-year yield is the most Fed sensitive, and it hit 0.77 percent before the minutes' release before falling back to 0.72 percent in afternoon trading.
Dudley has another chance to explain the Fed's position Thursday, when he speaks at 10 a.m. along with other New York Fed officials on its regional economy and Puerto Rico.
Wal-Mart also releases earnings Thursday morning, and it is sometimes seen as a bellwether of sorts for the economy and consumer.
Briggs said the Fed in its minutes seemed to raise the bar for the economy's performance. The FOMC noted that some participants thought the Fed should wait until the economic data provided a "greater level of confidence," but also added a new twist in that the economy should be strong enough "to withstand a possible downward shock." One possible shock the Fed was concerned about this summer was the U.K. vote to leave the European Union, and Fed officials had said they held off from hiking rates in June because of it.
There are other Fed speakers besides Dudley on Thursday. San Francisco Fed President John Williams speaks in Anchorage, Alaska, at 4 p.m. EDT, and Dallas Fed President Robert Kaplan speaks at 8 p.m. at the joint meeting of Dallas and Fort Worth chapters of Association for Financial Professionals.
But it's the Fed minutes that are likely to drive the market view on the Fed until next week when Fed Chair Janet Yellen speaks at the Fed's annual symposium in Jackson Hole, Wyoming.
"It seems to me like it's still sufficiently noncommittal, that September does not look likely," said Ward McCarthy, chief financial economist at Jefferies, of the minutes.
"I do think December is becoming more likely, but I also do not think they will make a commitment to that or start laying the groundwork until at least the November FOMC meeting. They've been burned by trying to set the stage too soon," he said. McCarthy said the Fed members' views are very scattered and that also confirms inaction for September.
Stephen Stanley, chief economist at Amherst Pierpont, said his biggest takeaway from the minutes is the division on the Fed. "The hawks are every bit as hawkish as they have been at any point this year. 'Some' felt that the economy has essentially achieved full employment and that 'another increase in the federal funds rate was or would soon be warranted, with a couple of them advocating an increase at this meeting.' However, for the FOMC to actually raise rates, the dovish contingent will have to warm up to a move," he wrote.
Dudley is in that dovish camp, along with Yellen.
The minutes also show that some Fed members thought it would be appropriate to wait for more information on inflation. "As I have emphasized, with the employment box checked, the key impediment to further normalization of rates is inflation, which remains well below the Fed's 2 percent target," Stanley wrote.
The S&P 500, down several points earlier in the day, turned around after the minutes and closed higher Wednesday. The S&P rose 4 to 2,182, and the Dow was up 21 at 18,573. The dollar index ended the day flat.
Other early earnings Thursday include Nestle, Hormel Foods, Toro and Canadian Solar. Applied Materials, Gap, Ross Stores and Mentor Graphics report after the close.