This is the number everyone is watching Wednesday

ADP's private sector payroll report could be more important than usual, since the Fed opened the door to hiking rates in September.

Friday's August government employment report is the big chunk of data markets are awaiting, but ADP is a kind of warm-up to that number.

"Post-Jackson Hole, all eyes are on data. It's been improving, and I don't expect the jobs data is going to be any different," said Art Hogan, chief market strategist at Wunderlich Securities.

People seek employment at a job fair for the homeless in Los Angeles.
David McNew | Reuters
People seek employment at a job fair for the homeless in Los Angeles.

Fed officials, at a symposium in Jackson Hole, Wyoming, last week, made it clear a rate hike in September is a possibility, though the market is only pricing in a one-in-three chance and December is seen as more likely.

Economists expect ADP to report 175,000 private sector payrolls were added in August. ADP is not viewed as an accurate preview for the government report, but it is watched anyway as anecdotal information on the labor market. ADP payrolls totaled 179,000 last month, while the government report was 255,000. Economists expect to see 180,000 jobs in the government report Friday.

"It's all employment. That's the data people are going to be looking at to see what it means for the Fed," said Joseph LaVorgna, chief economist at Deutsche Bank. LaVorgna said there is too much focus on Friday's employment report. "Unfortunately, the Fed has set itself up with this one number. They've made this one number more important than it should be."

The ADP report is released at 8:15 a.m. EDT, and there is Chicago PMI at 9:45 a.m. and pending home sales data at 10 a.m.

The Fed official who had the most impact on market expectations for rate hikes was Vice Chair Stanley Fischer, who said in an interview with CNBC Friday that the Fed could hike rates in September.

"Is the market going to treat a 240,000 number different than 180,000 number? These numbers are quite volatile. It's somewhat of a random number generator. These things get revised and the revisions are large. My guess is it will be OK, but not strong enough to get the Fed to move next month," said LaVorgna. "A 250,000 number like July would get the Fed's attention. Whether the Fed would go depends on what the market does. If all of a sudden people think they're going in September and they don't go, the markets wobble."

Hogan said the weakness in stocks this week is a response to comments from Fischer and Fed Chair Janet Yellen, as well as New York Fed President William Dudley. Dudley also mentioned September as a possibility, ahead of the Jackson Hole meeting.

"It's hard to put any faith behind these [market] moves when you're talking about the slowest days of the year," Hogan said. "The most important people at the Fed say we're raising rates. … We'd be down in a normal environment. In a reasonable time, the market would be down 500 points. The market is trying to recalibrate and readjust."

Hogan pointed to the gain in financials, which benefit from higher rates, and the sell-off in utilities. The S&P financial sector was the only positive group Tuesday, with a gain of 0.8 percent. Utilities were the worst performers, down 1 percent. The S&P 500 closed at 2,176, down 4 points.

"It's not behaving like a massive sell-off at all. Is this a market ready for a rate hike? I would say it is," he said.

"I don't think the market would celebrate a weak jobs report," said Hogan.

Earnings Wednesday include Brown-Forman, Chico's FAS, Bob Evans,, Box, Five Below and Shoe Carnival.

Traders will also be watching crude prices, which were weaker Tuesday. West Texas Intermediate oil futures settled at $46.35, down 1.34 percent. There is 10:30 a.m. EDT government inventory data Wednesday. API inventory data late Tuesday showed a build in crude of 942,000 barrels, which is bearish, but a drawdown in gasoline of 1.65 million barrels.