"There's a lack of volume because a lot of folks are out on vacation, but people are also waiting for Friday's jobs report," said Katie Stockton, chief technical strategist at BTIG.
The August employment report is due for release Friday at 8:30 a.m. ET. Economists polled by Reuters forecast the economy added 180,000 jobs in August.
"If there's one economic report that's going to move the needle, it's this one," Sarhan said.
Investors will closely read the report, looking for clues about whether the Federal Reserve will raise interest rates in September. Market expectations for a September rate hike were at 30 percent Thursday morning, according to the CME Group's FedWatch tool.
"Of all these wait-and-see weeks we've had ... this is the most imperative," said Art Hogan, chief market strategist at Wunderlich Securities. "I don't expect any players to make any big decisions in front of the report."
Thursday was the first trading day in September, which has historically been a volatile month for stocks. The S&P has recorded a move of at least 1 percent — in either direction — every September since 2006.
"There's a lot going on in September and that's going to set the tone for the rest of the year," said Casey Clark, vice president of investment strategy at Glenmede, noting September will see a jobs report, a European Central Bank meeting, a Fed meeting and a U.S. presidential debate, among other events.
"The economy and the markets are strong enough to handle a rate hike this year. Much like last year, this is going to draw a lot of attention from market participants ... but we think it will be a relative non-event," Clark said.
August concluded with the S&P slipping 0.12 percent, snapping a five-month winning streak.
"It was essentially the first down month for the S&P since the February low," BTIG's Stockton said. "It reflects a pause in the market."
"You could walk away thinking not much happened in August, ... except for the sector rotation, which is good for the market," Wunderlich's Hogan said. "Inside a very quiet month, you had a rotation from the overbought into the oversold."
The financials sector led the way for the S&P in August, rising more than 3.5 percent.
But the S&P posted its fifth negative session in six on Wednesday. "The first level of importance is 2,135 as initial support and a former resistance level," Stockton said. She added that it's possible for the S&P to breach that level in the near term, but " there's still a lot of support below."
In oil markets, U.S. crude settled 3.45 percent lower at $43.16 a barrel, as supply glut worries resurfaced after Wednesday's inventories report from the Energy Information Administration.
U.S. Treasurys rose Thursday, with the two-year note yield near 0.78 percent and the benchmark 10-year yield around 1.57 percent. The dollar fell against a basket of currencies, with the euro near $1.12 and the yen around 103.20.