Weekly jobless claims is the data du jour that could tilt the market either way Thursday.
But analysts aren't expecting it to do much for stocks, unless there's a big negative surprise. Economists expect 490,000 new claims, down from 500,000 last week, when the number is reported at 8:30 a.m. Claims have been stubbornly high, and have risen for the past three weeks after weeks of declines.
"As long as it prints down from 500,000, I don' t think it's a big market mover...if it stays up there, I think people get nervous," said BlackRock investment strategist Russ Koesterich.
Stocks Wednesday staged an impressive reversal after selling off hard in early trading on worst than expected durable goods orders and the worst new home sales report ever. The Dow rose 19 to 10,060, after dipping as much as 102 points earlier in the day. The S&P 500 finished the day up 3 points at 1055, its first up day in five.
Durable goods rose just 0.3 percent, sharply lower than the 2.8 percent expected. New home sales fell 12.4 percent to 276,000 units, the slowest pace since the data series began in 1963.
"I don't get so worried...because the durables are notoriously volatile," said Koesterich. "If everything goes according to plan, nobody would have sweated the durables number. I think it was an excuse to sell." Koesterich said he thinks the market will stay range bound for now.
Miller Tabak chief economic strategist Dan Greenhaus said the market has shown resilience in the face of bad numbers. "Certainly, the last two days have increased confidence with respect to the market's ability to withstand further negative headlines," he said.
"In the larger sense, the S&P 500 is off 7 percent from a near term high, and it's off 14 percent from the spring high, so if the economic data doesn't come out as poorly as we've seen lately, there's room for the market to rally," he said. He does, however, expect to see a significant downward revision in second quarter GDP to 1.2 - 1.4 percent, when it is released Friday.
He said another big deal for the market this week will be Fed Chairman Ben Bernanke's speech in Jackson Hole, Wyo. Friday morning.
"What he says in relation to a slowing economy will be quite important," he said. "...You want to hear a resolute Fed chief who says the economy is not falling into a second recession, but if it were to worsen the Fed stands ready to do everything and anything."
Maxim Group technical analyst Paul LaRosa was watching the Dow Wednesday to see if it would confirm moves made by other key indices. The smaller cap Nasdaq Comp, the Russell 2000 and S&P 500 all closed below their interim support levels, and if the Dow did the same, it could be the start of a serious sell off.
"The Dow refused to confirm by closing below its important level of 10,007, and I would expect a near term rally will develop, which could take the indexes up between 3 and 5 percent. But I don't think it will be anything significant," LaRosa said. "We're still going to advise people to use the rally to lighten up and put on shorts."
LaRosa said early in the day Wednesday that the number of new lows being made recently is a negative sign for stocks. "On the Nasdaq yesterday there were 255 new lows yesterday. That's a big number. On Friday, there were 140 new lows. That's not a good sign. The underpinnings are just not there," he said.
But after the close, he said the market's ability to reverse course could mean a positive open Thursday. "Usually when you have this kind of flush out rally, you go higher into the next day," he said.
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