Equity markets retreated on Thursday after mixed news from the labor market. The ADP report was the news of the day, and it came in much hotter than expected. The data suggests resiliency within the labor market that will underpin wage inflation and inflation this year. Contrary to the ADP, the JOLTs data contracted more than expected, suggesting tightening conditions within the labor market. The takeaway for investors is that the FOMC should be expected to continue hiking rates as indicated, but the end of the cycle is getting closer. The question that remains is how hard the landing will be. Will the US tip into recession in 2023?

Today's action will be driven by the Non-Farm Payrolls report. If it comes in as hot as the ADP or even close, the S&P 500 will likely continue its decline. If so, the line to watch is at 4,300. The summer rally may continue if the market can sustain that level of support. If not, the next major stock market correction may have just begun.