Friday's earnings include economic bellwether General Electric, Honeywell, Schlumberger, Kansas City Southern, Sun Trust, Steve Madden, Stanley Black & Decker and NextEra Energy. There are also March existing home sales at 10 a.m. ET and fresh data on the manufacturing sector, when Markit releases its flash manufacturing and services PMI data at 9:45 a.m. ET.
"We could get a great number out of GE, pop on the open and then feel that Friday fade-away because logic dictates you're going to have a risk-off afternoon," said Art Hogan, chief market strategist at Wunderlich Securities. Hogan said the French election Sunday could hang over the markets, as it did earlier in the week on concerns the far-right or far-left candidates could do better than the two centrist candidates.
"The fact we actually rallied this week when the sentiment is negative was very positive," Hogan said.
Stocks surged as talk out of Washington pointed to the potential for some action on health care, which is viewed as a precursor to any move forward on tax reform. Treasury Secretary Steve Mnuchin also said Thursday that progress is being made on tax reform. rPresident Donald Trump said he was hopeful there would be a vote on health care next week and also to fund the government.
"In general, it sounds like the tone of the policy agenda is getting pulled back to 2017," said Hogan. "Everybody spent the last two weeks pushing that out to 2018 and pricing that in."
Earnings helped lift stocks Thursday, despite high-profile misses earlier in the week by Goldman Sachs and IBM. With about 16 percent of the S&P 500 companies reporting, earnings look as if they could grow about 11 percent over last year, according to Thomson Reuters. Of those companies, 74 percent have beaten earnings estimates and 60 percent beat revenue estimates.
Strategists were watching some important technical moves in the S&P 500 after two days of heavy losses this week. The S&P 500 surged to close at 2355, but missed closing at the 50-day moving average by one point, after trading above it. Just as it sounds, the 50-day moving average is the average of the last 50 S&P closing prices, and a close above it would be viewed as positive.
Hogan said those technicals could come back into play next week.
Oppenheimer technical analyst Ari Wald said he remains positive on the market and doesn't see a big problem with the miss on the 50-day though some bears could see it as a near-term negative.
Instead, he is looking forward to a move to 2380 on the S&P 500. "The near-term trading level I'm watching on the upside is 2380. If we can get above there, that would reverse the S&P 500 trend of lower highs since early March and indicate this near-term correction has run its course and the longer term advance is ready to resume," he said.
The buying in Treasurys, which pushes rates lower, subsided Thursday, and yields moved higher. The drop in the 10-year yield below 2.30 percent last week was seen as a major psychological break, as the yield has held above that level since around the election in November. On Thursday, the 10-year yield was about 2.23 percent, above the week's lows.
"What we've recommended is paying attention to this equity cycle but not playing the interest rate game," he said.
Wald said he is advising investors to avoid trades that are linked to interest rates, like financials and utilities. His three top sectors are tech, consumer discretionary and industrial. He said he plays consumer discretionary through the XLY, Consumer Discretionary Select Sector SPDR Fund.
"Within this consolidative market tape, that's a big segment of the market, 13 percent of the S&P 500 by market cap already at a new high," said Wald. He said the sector is showing leadership. "This is what we want to own, and it's breaking out to new highs today."