Stocks closed mostly lower yesterday, except for the Nasdaq which added 0.25%.

Yesterday's ADP Employment report came in at a weaker-than-expected 99,000 private payroll jobs vs. the consensus for 140,000. Stocks fell in pre-market trading immediately following those numbers. Granted, they regained those losses by the open. But only to end mostly lower by day's end.

Yesterday's reaction to ADP's soft jobs report shows the market's concern over the weakening jobs market. Will this turn into the soft landing the Fed seemed to think we would get, or will it deteriorate more quickly and more severely than expected?

This morning's Employment Situation report by the Bureau of Labor Statistics (BLS) will give us a snapshot of that answer. The consensus is calling for 160,000 new jobs to have been created in August (136,000 in the private sector and 24,000 in the public sector) vs. last month's 114K (97K private, 17K public). The unemployment rate is expected to tick lower to 4.2% from 4.3%.

Will the number of new jobs surprise to the upside or the downside (if at all)? And whatever it shows, will good news (a strong jobs report) be considered good or bad? Or will bad news (a weak jobs report) be considered bad or good?

All eyes will be on this morning's report.

In other news, yesterday's Challenger Job-Cut report rose to 75,891 from last month's 25,885.

And Weekly Jobless Claims fell -5,000 to 227,000 vs. views for 230,000.

Additionally, the PMI Composite report showed the Composite Index at 54.6, up from last month's 54.3 and estimates for 54.1. The Services Index came in at 55.7 vs. last month's 55.0 and expectations for 55.2.

And the ISM Services Index inched up to 51.5 vs. last month's 51.4 and estimates for 51.1.

After today's Employment report, the market will shift its focus to next week's CPI and PPI inflation reports. But since inflation fears have receded and the risks to the labor market have increased, the jobs report is what's grabbing more attention.

Either way, it's hard to imagine a scenario where the Fed doesn't cut rates in two weeks. But these upcoming reports will play a role in what the Fed does afterwards in November and December.

The Employment report comes out at 8:30 AM ET.

Best,