Earnings news was trumped Wednesday by worries about the global economic recovery.
First, reports overnight that China would force tighter bank lending sent stock and commodities markets reeling globally on concerns China's booming growth would slow. (See Trader Talk blog: China Bank Boss Denies Loan Report)
The other concern was Greece. Investors Wednesday sold Greek bonds and yields jumped, as worries continue about the country's ability to find financing. Greek Finance Minister George Papaconstantinou said the country is looking at all options.
"That's encouraging people to take risk off the board," said Marc Chandler, chief currency strategist at Brown Brothers Harriman.
The "risk on" trade, where investors sell dollars and buy risk assets went into reverse Wednesday, raising questions about whether the dollar could be in for a more prolonged move higher.
"The markets are not letting Greece have the time to work out its problems...The markets are saying that's not going to happen," said Chandler. The euro lost 1.3 percent against the dollar by late afternoon in New York. It was trading at $1.4101.
"The next target we test is $1.40" on the euro, he said.
"Going forward, the dollar is going to be ruled by two things..either a general improvement in business activity...or with all these refundings coming up, the dollar rises as a result of rising Treasury yields."
Gold lost 2.4 percent to $1112.30 per troy ounce. Oil fell along with gold and other commodities and was 1.8 percent lower at $77.62. Weekly oil and gas inventory data is reported at 10:30am Thursday.
"Gold is also down pretty hard. That reaffirms in my mind that gold is a risk arb trade, not the safe haven trade. Gold is moving alongside risk assets. Many people are trying to sell it as a safe haven trade," Chandler said.
What to Watch
For Thursday's markets, China's overnight report of fourth quarter GDP could be a big factor. China is expected to report growth of 10.5 percent year over year. Wall Street is also focused on Goldman Sachs' before-the-bell earnings and weekly jobless claims, reported at 8:30am.