Equity markets moved higher for the 4th consecutive day despite weak labor data. The ADP data shows job growth cooling more than expected in August, suggesting a weak NFP figure on Friday. The news is taken as good news because it shows slowing in the economy, including slowing wage growth, although wage inflation is still running hot. The risk for traders is that the NFP and ADP do not often track in alignment and may provide a different perspective on Friday.

The S&P confirmed a bottom at 4,350 and is now moving higher. The index could move up to retest the recent highs and may surpass that level if this week's data is sufficiently cool. The PCE price index is the wild card; it is due on Thursday and is expected to show core consumer inflation accelerated on a YOY basis compared to last month. If that trend continues, the FOMC should be expected to continue hiking rates regardless of cooling within the labor market.