Data is the fuel that keeps Wall Street's engine humming along. It can also be the catalyst that sends the Dow Jones Industrial Average (^DJI +0.59%), S&P 500 (^GSPC +1.18%), and Nasdaq Composite (^IXIC +2.07%) soaring or plunging.
Although economic data releases are a relatively common occurrence, there's a doozy on tap for tomorrow, April 10. At 8:30 a.m. ET., the U.S. Bureau of Labor Statistics will publish the March inflation report -- and the stock market isn't ready for it.
Image source: Getty Images.
Historic energy supply disruption is having a tangible impact on U.S. inflation
Roughly six weeks ago, U.S. and Israeli military forces began attacks against Iran. Shortly after these operations commenced, Iran closed the Strait of Hormuz to virtually all oil exports. This channel between Iran and Oman sees approximately 20% of the world's liquid petroleum needs pass through it daily.
Crude oil prices have catapulted in the wake of the biggest energy supply disruption in history. A barrel of West Texas Intermediate crude oil has risen by 67% since Feb. 27. Meanwhile, the national average cost of a gallon of regular gas has jumped from less than $3 to $4.09 over the same timeline, through April 3. The percentage increase in diesel prices has been even steeper, according to data from AAA.
Average U.S. gas prices per gallon on April 3, per AAA:
-- NBC News (@NBCNews) April 3, 2026
• Regular: $4.09 (⬆️ $0.01 from yesterday, ⬆️ $0.98 from one month ago)
• Premium: $4.97 (⬆️ $0.01 from yesterday, ⬆️ $0.99 from one month ago)
• Diesel: $5.53 (⬆️ $0.02 from yesterday, ⬆️ $1.64 from one month ago)
The effects of the Iran war are directly hitting consumers at the fuel pump. According to research from The Motley Fool, the average American household spent 3.1% of their budget on gas in 2024, with lower-income households spending a higher percentage of their budget on fuel.
But there are much broader implications for the stock market than the possibility of constrained consumer spending due to higher fuel prices.
Fed Chair Jerome Powell and other members of the Federal Open Market Committee (FOMC) have some difficult data to consider at the next FOMC meeting. Image source: Official Federal Reserve Photo.
The March inflation report may completely alter the Federal Reserve's monetary policy
Although investors will be able to comb through the March inflation report in less than 24 hours, the Federal Reserve Bank of Cleveland's Inflation Nowcasting tool has been updating its Consumer Price Index forecast for weeks. As of April 3, the Cleveland Fed's forecasting tool is calling for a trailing 12-month inflation rate of 3.25%, up 85 basis points from the previous report. This is a massive jump.
The worry for Wall Street is that the stock market entered 2026 at its second-priciest valuation since January 1871, based on the Shiller Price-to-Earnings Ratio. One of the factors responsible for propping up this historically expensive market is the expectation that the Fed's ongoing rate-easing cycle will continue.
S&P 500 Shiller PE Ratio hits 2nd highest level in history 🚨 The highest was the Dot Com Bubble 🤯 pic.twitter.com/Lx634H7xKa
-- Barchart (@Barchart) December 28, 2025
However, an 85-basis-point jump in the trailing 12-month inflation rate, coupled with ongoing price stickiness associated with President Donald Trump's tariffs on imported goods, has the potential to completely alter the central bank's monetary policy. This report may be enough for Fed Chair Jerome Powell and other members of the Federal Open Market Committee (FOMC) to abandon their rate-easing cycle entirely and put rate hikes on the table.
Without the prospect of lower interest rates, a richly valued stock market would be highly vulnerable to downside.
Although the next FOMC meeting isn't until April 28-29, tomorrow's highly anticipated report will offer a big clue as to what to expect.
