A plethora of data Thursday only added to the confusion. Orders for durable goods were considered strong on the surface, rising 1.6% after a decline in October. But some economists said tax incentives, which expire at the end of the year, pulled orders from next year forward. They also note that new orders fell 0.8% excluding transportation, after a drop of 1.3% the month before.

A separate report showed that consumer sentiment improved in December while consumer income and spending were both higher in November and inflation remained tame. The personal consumption expenditure price index, which is considered the Federal Reserve's preferred measure of inflation, rose just 0.1% last month, down from a 0.4% rise in October. The core rate, which excludes food and energy, gained 0.1% for a fourth straight month.

Still, a hybrid of the core PCE index, made up of only observable prices, increased at its fastest rate in two years. And some pundits remain worried about the consumer, noting that personal income growth has slowed to 2.3% year over year, down from a peak of 3.5% in March and the slowest pace in 14 months. When adjusted for inflation, consumer spending was actually unchanged in November.

A sharp plunge in new home sales also offered mixed clues about the state of the economy, as analysts speculated that the drop was largely a result of bad weather. According to the National Oceanic and Atmospheric Administration, last month was the fifth wettest November on record.

"We expect at least a partial rebound in sales next month," said Goldman Sachs economist Bill Dudley.

Over in the currency markets, concerns about the dollar escalated this week, after French Finance Minister Herve Gaymard said international intervention is essential to prop up the flagging dollar.

"If we remain in a situation without any coordination, we can imagine a catastrophic situation" for the global economy, he said.

If you liked this article you might like

Coming Week: Earnings Flood

Coming Week: Earnings Flood

Don't Write Off Inflation Threat

Don't Write Off Inflation Threat

No Quick Fix for Trade Gap

No Quick Fix for Trade Gap

Merrill's Doll Sees Stocks 'Muddling Through'

Merrill's Doll Sees Stocks 'Muddling Through'

Downhill From Profit Peak

Downhill From Profit Peak