Gilead- To answer your question
Yes, if wages went down, ISM numbers retracted, CPI & PCE(especially PCE as it's what the government mainly goes by) kept trending down at a good pace, it would be good for the market. Why ? Because what the market wants most is to try and get a grasp on when inflation will come down to the 2% fed goal. If inflation stays high, the fed will keep on raising rates, and will eventually push the economy into recession. The mistake investors have been making is two fold. One is to put so much weight on CPI, when it's PCE(includes mainly service inflation outside rents) that the government goes by. Two is to make the assumption that you could look at how much CPI was coming down for 3 straight months, and make the assumption it would keep coming down at the same rate, and therefore inflation problems were basically over.
Bottom line is, after the recent data we just got on CPI, PCE, ISM, unemployment claims, wages, etc, not only is service inflation not coming down, other types of inflation are picking up again So again, to answer your question, if we get news that inflation is coming down nicely, especially services ie PCE, then it's good news for the market, as it marks the window that investors want to see inflation problems are ending.
However right now, inflation problems are still sticky, especially service inflation. That means the fed has to raise rates even more than they thought, which was around 5%. Now we might have to go to 6%. If we go to even 5.5%, and stay there for six months, it will likely push the economy into recession. At the same time, the markets are ignoring just about all news suggesting inflation remains a big problem. PEs in the S&P are 18 gong forward, and in the Nasdaq 26 going forward. Corporate profits are coming down dramatically. Consumer savings are coming down a lot. For crying out loud, MSFT, GOOG, and AMZN came out and said things will be slowing a lot in 2023.
Hope that helps
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