The S&P 500 extended its decline on Wednesday falling a little more than 0.70% at the low of the day after a late day downdraft. The move was small but sparked by a weak ADP employment figure and has the index below a key technical level. The index price action has fallen back into a downward sloping price channel that has been in place since late 2021. At this level, bearish traders may begin to pile back into the market and drive the index down to retest the recent lows near 3,650.

The next hurdle will come on Friday with the NFP report. The NFP report is expected to echo the ADP report and show weaker and weakening trends within the employment sector. The risk is that wage inflation won't subside, however, and add extra pressure on the Fed to raise interest rates.