Stocks are down on Wednesday after a two-day rally

New York
CNN business

So much for that October market rally?

Stocks retreated on Wednesday as a fresh batch of economic data revealed continued strength in the labor market and America’s services sector. This has led to new concerns that the Federal Reserve’s aggressive rate hikes to curb inflation will eventually lead to a recession.

The Dow was down about 100 points, or 0.3%, at midday Wednesday. The Dow fell more than 400 points earlier and briefly returned below 30,000. That put a small dent in earlier gains this week. The Dow rose nearly 1,600 points on Monday and Tuesday.

The S&P 500 and Nasdaq, which also rose in the past two days, were down 0.6% and 0.9% respectively.

Shares rallied this week despite concerns about the financial health of global banking giant Credit Suisse ( CS ) and a decline in U.S. job openings.

This bad news lifted the mood on Wall Street, as investors bet that it could lead the Fed to slow the pace of rate hikes. Australia’s central bank also raised rates by a smaller-than-expected amount this week, adding to hopes that global policymakers are beginning to worry more about the economic slowdown than inflation.

But that narrative changed a bit on Wednesday. Payroll processor ADP reported stronger-than-expected private-sector job growth for September, a sign that American companies are still hiring at a strong pace.

What’s more, the Institute for Supply Management reported on Wednesday that its non-manufacturing index was higher than expected. Activity slowed from August, but service companies still saw steady growth.

Strong economic data is likely to keep the Fed on track to raise rates sharply in November and December… perhaps too sharply. There is growing concern that the chances of a so-called monetary policy error are increasing and the Fed will trigger a recession.

Rising energy prices can also affect consumer sentiment—and the stock market. OPEC announced production cuts on Wednesday, news that sent oil prices higher.