Stocks could retest lows after August's fiery inflation shakes up markets

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Stocks could retest the June lows, as investors re-evaluate the outlook for interest rates after a disappointingly hot consumer inflation report.

Stocks could retest the June lows, as investors re-evaluate the outlook for interest rates after August's disappointing consumer inflation report. The consumer price index for August rose 0.1%, while economists had expected it to decline by 0.1%. That kicked off speculation the Fed would be even more aggressive about raising interest rates, with some pros even betting on a full percentage point hike coming as soon as next week.

The CPI report was a harsh slap for a market that had advanced going into the report. "The market rallied five days into what it thought was going to be a light number and it really had no business doing that," said Scott Redler, partner with T3Live.com. "The market does not feel good...Today it feels like everybody was wrong." Redler said the next test for the S & P will be whether it can hold 3,900 and, if not, a test of the June low is possible.

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