{"id":384565,"date":"2026-04-06T11:24:11","date_gmt":"2026-04-06T11:24:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/384565\/"},"modified":"2026-04-06T11:24:11","modified_gmt":"2026-04-06T11:24:11","slug":"the-federal-reserves-march-and-april-inflation-forecast-is-in-and-things-just-keep-getting-uglier-for-wall-street","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/384565\/","title":{"rendered":"The Federal Reserve’s March and April Inflation Forecast Is In — and Things Just Keep Getting Uglier for Wall Street"},"content":{"rendered":"

For much of the last three years, Wall Street’s bull market rally has been virtually unstoppable. Over the last six months, we’ve observed the benchmark S&P 500 (^GSPC<\/a> +0.11%), growth-driven Nasdaq Composite (^IXIC<\/a> +0.18%), and iconic Dow Jones Industrial Average (^DJI<\/a> 0.13%) touch psychologically important milestones of 7,000, 24,000, and 50,000, respectively.<\/p>\n

But things have been far more challenging for investors over the last six weeks<\/a>. The Dow and Nasdaq Composite both briefly dipped into correction territory, while the S&P 500 flirted with a double-digit decline. Although the immediate blame lies with uncertainties tied to the Iran war, it’s the longer-term implications for U.S. inflation<\/a> that should have Wall Street on edge.<\/p>\n

\"Jerome<\/p>\n

Fed Chair Jerome Powell and the Federal Open Market Committee have a challenging road ahead. Image source: Official Federal Reserve Photo.<\/p>\n

The Iran war is roiling Wall Street — and with good reason<\/p>\n

On Feb. 28, U.S. and Israeli forces kicked off military operations against Iran. Shortly after this conflict began, Iran closed the Strait of Hormuz to most oil exports. This is a problem, given that approximately 20% of the world’s liquid petroleum travels through the Strait of Hormuz each day, according to the Energy Information Administration.<\/p>\n

The law of supply and demand states that when demand for a good outpaces its supply, the price of that good will rise until demand tapers off. The reaction in the oil market has been swift<\/a>, with crude oil prices skyrocketing in the wake of this virtual closure.<\/p>\n

Gas prices in the US have moved up to $4.08 per gallon, their highest level since August 2022. The 36% spike over the last month ($3.00\/gallon to $4.08\/gallon) is the biggest we’ve seen in the past 30 years. pic.twitter.com\/wWDEg2e38u<\/a><\/p>\n

— Charlie Bilello (@charliebilello) April 2, 2026<\/a><\/p>\n

Most consumers have felt the impact of higher oil prices at the gas pump<\/a>. Over the last month, as of April 2, the national average price of a gallon of regular gas has surged by 36% to $4.08, per AAA. It’s been an even steeper climb for diesel, which has soared 46% to $5.51 per gallon.<\/p>\n

While higher gas prices are known to pinch consumers’ pocketbooks, it’s the inflationary impact of this historic energy supply shock<\/a> that could upend the stock market.<\/p>\n

\"A<\/p>\n

Image source: Getty Images.<\/p>\n

The Fed’s newest inflation forecast for March and April is unsightly<\/p>\n

In mid-March, the U.S. Bureau of Labor Statistics (BLS) reported a trailing 12-month inflation rate of 2.4% — the 59th consecutive month above the central bank’s long-term inflation target of 2%. <\/p>\n

When the BLS publishes the March inflation report on April 10, things are going to look markedly worse. The million-dollar question is: How much worse?<\/p>\n

The Federal Reserve Bank of Cleveland’s proprietary Inflation Nowcasting tool offers a glimpse of what to expect. A few weeks ago, this tool was projecting a trailing 12-month inflation rate of 3.02%<\/a>. But as of April 2, the March inflation estimate is up to 3.25%. <\/p>\n

Additionally, the Inflation Nowcasting tool predicts that the U.S. inflation rate will edge higher to 3.28% for April.<\/p>\n

A projected 85-basis-point jump in trailing 12-month inflation from the previous month is massive. More importantly, it almost certainly halts the Federal Reserve’s rate-easing cycle in its tracks and realistically puts the prospect of interest rate hikes on the table.<\/p>\n

The stock market began 2026 at its second-priciest valuation over 155 years<\/a>, according to the S&P 500’s Shiller Price-to-Earnings Ratio. The expectation of additional rate cuts is one of the reasons premium valuations have been sustained. A potential shift in monetary policy by Fed Chair Jerome Powell and other members of the Federal Open Market Committee<\/a> could pull the rug out from under a historically expensive stock market.<\/p>\n