The Nasdaq (^IXIC) edged into positive territory in pre-market trading Friday, up a fraction of a percent ahead of the open, while the S&P 500 tracker gained about half that amount. The March CPI report landed at 8:30 a.m. ET. Consumer prices rose 0.9% for the month and 3.3% year-over-year, driven almost entirely by a 10.9% surge in energy costs tied to the U.S.-Iran conflict. The headline numbers matched Wall Street’s consensus, but the core reading came in softer than expected. The Nasdaq will have to digest the news, and is likely to mean the Federal Reserve keeps rates flat rather than tighten in the next meeting.
What the CPI Print Actually Says
Strip out food and energy, and the inflation picture looks calmer. Core CPI rose just 0.2% month-over-month and 2.6% year-over-year, both a tenth of a percentage point below forecast. That distinction matters: the energy spike is a geopolitical story, not a domestic demand story. The Iran war has sent gasoline and fuel costs to multiyear highs, but underlying consumer price pressure remains below the Fed’s discomfort threshold. For the Federal Reserve, which targets inflation using the PCE measure rather than CPI, the softer core reading gives policymakers room to hold steady on rates rather than pivot toward additional tightening.
The 10-year Treasury yield, sitting near 4.29%, had already climbed about 17 basis points over the prior month in anticipation of a hot print. A headline number that matched but a core that missed to the downside could keep yields from spiking further, which would benefit rate-sensitive growth stocks that dominate the Nasdaq.
Where the Nasdaq Stands Heading Into the Print
QQQ closed Thursday at around $610, up about 1% on the session. The ETF has gained about 4% over the past week, a sharp recovery from earlier April turbulence. Year-to-date, QQQ is down less than 1%. The Nasdaq composite has risen in each of the last seven sessions, standing higher than when the Iran conflict began.
Semiconductor stocks have driven that recovery. TSMC reported a 35% surge in first-quarter revenue, beating Wall Street forecasts on sustained AI demand, with shares rising 2% in premarket. NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) appeared in Thursday’s most actively traded list with 115 million shares changing hands, closing near $184. The AI trade is holding up even as geopolitical risk clouds the broader macro picture.
The Broader Market Picture
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) closed near $680, up about 1% Thursday and 4% over the past week. The SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA) gained about 1% Thursday, and the S&P 500 has now risen in seven consecutive sessions with a 7.6% gain during that streak.
Small caps, tracked by the iShares Russell 2000 ETF (NYSEARCA:IWM), rose about 1% Thursday and are up about 6% year-to-date, outperforming large-cap benchmarks by a wide margin.
The VIX closed Wednesday at 21.04, down sharply from 25.78 the prior session and well below the 31.05 peak hit in late March. At 21, the fear gauge sits in the elevated-but-not-panicked zone, a full 19 points below the 40.72 reading recorded exactly one year ago.
The Bond Market and Oil Prices Hold the Key
The softer core CPI reading is the most market-friendly element of today’s report and could sustain the Nasdaq’s recent momentum if the bond market absorbs the headline energy-driven number without pushing the 10-year yield back toward its 4.58% May 2025 peak. The geopolitical wildcard remains the Iran cease-fire: weekend peace talks are scheduled in Islamabad, and any breakdown could reignite energy prices and the inflation story. If the 10-year yield holds below its May 2025 peak of 4.58% after today’s print, that would signal the bond market is treating the energy spike as transitory, a condition that historically supports growth stock valuations. Oil price stability ahead of the weekend would reinforce that read.
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