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Market Insider: JPMorgan Could Rule Thursday

JPMorgan Chase could rule the day Thursday.

Traders expect the stock and Treasury markets to take their cue from the bank's first quarter earnings report and forward comments.

"They told you they had a good January and February. I think it's the most important thing that our market is waiting for," said Rick Klingman, managing director of Treasury trading at BNP Paribas.

From 'Fast Money':

If the number is strong, bonds could sell off, he said. JPMorgan is expected to earn $0.32 per share in the first quarter, compared to last year's $0.68 per share.

In the stock market, traders are also hanging on JPMorgan's report, hopeful it will show the trend of positive surprises in big financial names carries over to the company that is seen as the best of the big banks. J.P. stock was up more than 6 percent, along with the financial sector Wednesday. The group gained more than 5 percent.

"If JPMorgan has a disastrous number, we're done," Execution LLC's Tim Smalls said of the stock market rally. "But I don't think ... they could have a disastrous number. We'd know about it already."

Besides JPMorgan, Nokia, Southwest Air, Gannett, Illinois Tool and Parker Hannifin report before the bell. Google and Biogen Idec report after the closing bell.

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In part, the move in financials Wednesday was inspired by news from American Express , which showed that card delinquencies may be stabilizing. American Express said its 30-day delinquency rate decreased to 5.1 percent in March from 5.3 percent the month earlier. That number is seen as a barometer for future defaults. American Express said its annualized net charge off rate rose slightly to 8.8 percent from 8.6 percent in February.

For the industry, defaults are at record levels. Capital One said its charge off rate rose to 9 percent after adjustments, and JPMorgan's rose to 7.1 percent from 6.4 percent in February. Citigroup's rate was 9.7 percent, compared to 9.3 percent in February.

Smalls said the market was focused on the credit card data more than usual for its window into the health of both the consumer and financial institutions. "These are the type of things people don't usually look at. It's become a spectator sport today," he said.

Charting GE

The Dow Wednesday rose 109, or 1.4 percent, to 8029, while the S&P 500 was up 10, or 1.25 percent to 852. The Nasdaq though was barely higher, rising a point to 1626.

The dollar gained 0.4 percent against the euro , to a level of $1.3222 per euro. The dollar rose 0.5 against the yen .

In the Treasury market, the 10-year gained, which lowered its yield to 2.763 percent, its lowest level since April 2. The two-year saw its yield decline to 0.843 percent, its lowest yield in two weeks.

Klingman said the Treasury market was quiet late in the day as stocks moved from up 40 or so on the Dow to up more than 100. "We had several buy backs and we don't have any new supply for the next week or so, so we're not reacting to equities. We're just sitting around waiting to see what the next bank earnings are going to be," he said.

Perennials or Weeds?

All the talk about green shoots makes every piece of data a critical part of the economic picture. The reality though is that the "green shoots," or data that's not quite as ugly as the last reading, are popping up in a garden full of contradictions. Just look at the Fed's beige book, where the Fed listed ways that the economy weakened further but also said the pace of decline is slowing in five of its 12 districts.

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The stock market latched onto the positives there. In other data Wednesday, industrial production fell 1.5 percent - its fifth month of decline - and consumer prices slid 0.4 percent, their first year over year decline in more than 50 years. Production plunged at an annual rate of 20 percent in the first quarter.

Yet, there were some "green shoots" in the slowing decline in New York state manufacturing data, and the National Association of Home Builders survey showed a jump in sentiment from 9 to 14. The home builders said they are seeing more potential buyers.

Thursday's data includes weekly jobless claims and housing starts, both at 8:30 a.m., and the Philadelphia Fed survey at 10 a.m.

President Obama visits Mexico Thursday.

Signs of Life

Just as merger activity gives a lift to stock traders' confidence, the ability of companies to issue new stock also brings hopefulness. Rosetta Stone's 6.25 million share offering priced Wednesday at $18, above the estimated $15 to $17 range. The IPO is the fourth of the year. Another issuer, Bridgepoint Education made its market debut Wednesday.

On Tuesday, EBay said it would break off its Skype internet phone service in an expected offering.

Questions? Comments? marketinsider@cnbc.com