A Huge Move May Be Imminent for Stocks, With the Most Consequential Data Release of the Year Just Hours Away

The big day has arrived -- and it has nothing to do with any earnings report or initial public offering.

Mere hours from now, at 8:30 a.m. ET, the U.S. Bureau of Labor Statistics will publish the March inflation report, which, in all likelihood, will send the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) screaming higher or lower in short order.

Image source: Getty Images.

U.S. inflation is expected to jump dramatically in the wake of the Iran war

What makes the March inflation report so intriguing is that it's the first month we'll see the impacts of the Iran war baked into pricing data.

Approximately six weeks ago, U.S. and Israeli military forces began attacks against Iran. Shortly after these military operations commenced, Iran closed the Strait of Hormuz to most oil exports. The result has been the largest energy supply disruption in history.

Average U.S. gas prices per gallon on April 3, per AAA:

• 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)

-- NBC News (@NBCNews) April 3, 2026

The most tangible impact of the Iran war has been the near-parabolic climb in crude oil prices. With West Texas Intermediate crude oil closing well above $100 per barrel for the first time since July 2022, the cost of a gallon of gas and diesel has risen at the fastest pace in three decades.

But higher oil prices affect more than just consumers' pocketbooks. It can make virtually all forms of transportation costlier, negatively impacting supply chains and production costs across most sectors and industries.

It can also have a notable impact on the stock market.

The Federal Open Market Committee's ongoing rate-easing cycle will be put to the test. Image source: Official Federal Reserve Photo.

The March inflation report may represent a turning point for stocks (and the Fed)

Although monthly inflation reports always have some semblance of importance for investors, the March inflation report is arguably the most consequential data release of the year.

When 2026 began, the S&P 500's Shiller Price-to-Earnings (P/E) Ratio was above 40. The Shiller P/E has exceeded 40 during a continuous bull market only three times over 155 years, indicating just how pricey equities are.

Aside from the excitement over the rise of artificial intelligence (AI), one of the primary reasons stock valuations have remained elevated is the belief that the Federal Reserve will stay the course with its rate-easing cycle. Lower interest rates make borrowing less costly, which can fuel AI data center buildouts and ongoing innovation.

US Inflation Rate data by YCharts.

However, with the inflation rate expected to have spiked higher in March, it's likely that the central bank will, at the very least, pause rate cuts. The Federal Reserve Bank of Cleveland's Inflation Nowcasting tool predicts the trailing 12-month inflation rate for March will have jumped 85 basis points from February to 3.25% (as of April 3).

There's also the very real possibility that Fed Chair Jerome Powell and other members of the Federal Open Market Committee consider shifting their monetary policy stance toward rate hikes after this report is released. Higher lending rates would represent a serious threat to Wall Street's AI-driven rally.

Regardless of the headline inflation number, the table appears set for a huge move in stocks and Wall Street's major indexes.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.