Energy should no longer be the drag it had been, and that should be another positive for stocks. "[S&P] earnings should grow in the 6 to 7 percent range. Half of that is just energy not being a drag like it was last year," he said.
Oil has recovered sharply from its February bottom in the $20s per barrel. West Texas Intermediate crude futures for February settled Thursday at $53.77 per barrel, off 29 cents. WTI is now up 45 percent for the year.
Treasury yields were lower Thursday, and end-of-year buying also helped spur demand at the Treasury's $28 billion seven-year note auction Thursday afternoon. The 10-year yield was trading at 2.47 percent in late afternoon Thursday.
Friday's market could be even quieter with bond trading ending early on the final day of the year. The stock market is open for a full day.
The final data for the year is Chicago PMI at 9:45 a.m. ET on Friday.
"I'm surprised there's as much softness as we've seen in the last two days. This year there's a double incentive not to sell. There's a potential that capital gains rates would be lower next year," said Randy Frederick, Charles Schwab managing director, trading and derivatives.
But Frederick and others said there are more pressures on the market, including the rebalancing of stock and bond positions by pension funds.
"You've got portfolio changes. You have professional investors trying to hit benchmarks," he said.
Frederick said the U.S. sanctions on Russia and expulsion of diplomats, announced Thursday, did not impact the market. "At this point there's not a whole lot to be worried about. We don't have a very good relationship with Russia to begin with. We don't have much trade with them," said Frederick.
Frederick said the market could see some tax-related selling next week by investors who expect lower capital gains tax rates in 2017. President-elect Donald Trump has said getting rid of the Affordable Care Act is a priority and that means the additional 3.8 percent add on to the capital gains tax for some investors would also go away. The capital gains tax rate is 20 percent.
Around the Jan. 20 inauguration may also be a time for selling, as Trump takes office and investors start to look for action on some of his promises, Frederick said. Trump's proposed tax cuts, reduced regulation and infrastructure spending have helped fuel a 5 percent gain in the S&P since the election.
"There's two times to be concerned in January. Economically the backdrop is solid, but you could argue, we'll have a little more volatility," Frederick said.