Weaker-than-expected nonfarm payrolls could force the Fed to slash rates more aggressively.

September trading kicked off with major indexes dipping as the market repositioned itself ahead of a few key data points due throughout the week.

While soft landing hopes helped the S&P 500 and Dow Jones Industrial Average notch their fourth-straight monthly gain at the end of August, all eyes are now on manufacturing and labor data to see whether this trend still has legs.

On Tuesday, US manufacturing data will offer investors insight into how well the economy is keeping up, but the real test will follow on Friday, when August's nonfarm payrolls report is scheduled for release.

Economists predict that US employers added 162,000 jobs last month, which suggests that the unemployment rate will back down modestly from 4.3% to 4.2%.

However, if the release shows any labor deterioration that sends the unemployment rate meaningfully higher, it could force the Federal Reserve to cut by more than expected during its September 18 policy meeting. As demonstrated after July's weaker-than-expected labor data, that result could roil markets and spark fears that the US economy is slowing.

What's more, September is traditionally a challenging month for the stock market, and investors may have to brace for more volatility ahead.