Wall Street Week Ahead: Inflation Takes Center Stage as Markets Navigate Middle East War Uncertainty

The S&P 500 ended the week higher, recovering after its worst quarterly performance since 2022. Investors now turn their attention to the March CPI report, due April 10, which is expected to reflect early impacts of rising oil prices. On the earnings front, companies like Delta and Constellation Brands are set to report, with more first-quarter results scheduled later in the month.

A fresh inflation reading alongside the first wave of corporate earnings could offer insight into how the Middle East conflict is affecting the U.S. economy and businesses, as markets look for signs of stability after weeks of volatility.

Market sentiment remains mixed, with traders reacting to conflicting signals around a possible de-escalation of the conflict, which began over a month ago and involves U.S.-Israeli strikes on Iran.

Despite recent gains, the S&P 500 had previously logged five consecutive weeks of losses and recorded its weakest quarter since 2022. The index has been under pressure since late February, largely due to the conflict and the resulting surge in energy prices.

Equities have struggled this year, with additional concerns around artificial intelligence disruption and weaknesses in private credit markets adding to the uncertainty. The S&P 500 is still down करीब 6% from its late-January record high.

Energy markets remain central to investor focus, particularly developments around the Strait of Hormuz, a key oil transit route in the Middle East where shipping activity has been disrupted. U.S. crude prices climbed above $110 per barrel on Thursday, after surpassing $100 earlier in the week for the first time since 2022.

Next week’s CPI report will serve as an important test of inflation pressures stemming from higher energy costs. With U.S. crude up nearly 90% this year, average gasoline prices in the U.S. have risen above $4 per gallon for the first time in over three years.

According to a Reuters poll, the March CPI is expected to rise 0.9% month-over-month, while core CPI, which excludes food and energy, is projected to increase by 0.3%.