Sellers Crash Bulls' Party

Oil futures were well above $64 a barrel for most of Thursday's session before finishing flat as traders eyed political developments in Iran, where the government has cleared the way for a resumption of uranium enrichment as a precursor to restarting its nuclear program. February crude finished the session unchanged at $63.94 a barrel in Nymex floor trading.

The Energy Department said natural gas inventories fell 20 billion cubic feet last week, matching estimates. Natural gas futures finished down 30 cents to $8.94 per million British thermal units.

A slew of economic data hit the tape Thursday. The Commerce Department said the trade deficit narrowed to $64.2 billion in November. Economists expected the deficit to shrink to $66.0 billion from a revised $68.1 billion in October.

The Labor Department said its import price index fell for a second consecutive month in December, down 0.2% after a revised 1.8% decline in November. Economists expected a 0.1% rise. Excluding fuel, import prices were up 0.2%. Export prices rose 0.1%.

Also, the Labor Department said first-time unemployment claims rose by 17,000 to 309,000 last week. The less volatile four-week moving average fell 5,500 to 311,500. Also, the Treasury Department the December U.S. budget came in at a lower-than-expected $11 billion.

On Friday, the producer price index and retail sales for December, along with business inventories data for November, are expected.

"Investors are turning their attention from an end to Federal Reserve rate hikes to fourth-quarter earnings, the first-quarter outlook and the release of economic data," said Paul Mendelsohn, chief investment strategist with Windham Financial. "Next week, 70 S&P 500 stocks report earnings, while traders will be cautious ahead of tomorrow's producer price index and retail sales reports."

Odds of the Fed continuing its rate hike campaign at its next meeting on Jan. 31 currently stand at 96%, according to fed funds futures. For the March 28 meeting, odds are 64%, up from 44% just after the release of the latest FOMC minutes, which suggested the Fed was going to stop hikes soon. Fed funds are suggesting rates will go no higher than 4.75% in 2006.