The Stock Market May Fall Sharply on April 10 and April 11. Here's What Investors Should Know.

The S&P 500 (SNPINDEX: ^GSPC) has tumbled 18% from the record high it reached less than two months ago, putting the benchmark index deep in market correction territory. That drawdown has primarily been caused by aggressive trade policies pushed by President Donald Trump, especially the "reciprocal tariffs" he announced on April 2.

Investors will get some important information on April 10 and April 11 that should provide insight into the state of the economy. Read on to learn more.

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April 10: The Labor Department will release March inflation data

On Thursday, April 10, at 8:30 a.m. ET, the Labor Department will announce Consumer Price Index (CPI) data for March. The CPI is a popular benchmark for inflation. It measures price changes across eight major spending groups, which cover over 200 product categories.

Recently, inflation accelerated in four consecutive months before peaking at 3% in January, then decelerated modestly to 2.8% in February. Economists expect another deceleration in March. The consensus estimate says inflation will slow to 2.6%, a level last seen in October 2024.

The Trump administration did not impose its most severe tariffs until April, but some duties were in place in March and certain companies may have raised prices in anticipation of the more severe tariffs. So, the CPI reading may exceed expectations on Thursday, which would likely cause the stock market to fall, perhaps sharply.

That's because investors are particularly concerned that tariffs will lead to stagflation, a situation in which economic growth slows and inflation increases. Stagflation would put the Federal Reserve in a difficult spot because raising interest rates would further slow the economy, but cutting rates would further increase inflation. In short, stagflation is a lose-lose situation for policymakers.

April 11: Big banks and BlackRock will announce financial results

Three major banks are scheduled to report quarterly financial results before the stock market opens on Friday, April 11. The list includes JPMorgan Chase, Morgan Stanley, and Wells Fargo. Also announcing its quarterly financial results on the same day is BlackRock, the largest asset manager in the world.

Importantly, JPMorgan CEO Jamie Dimon discussed tariffs imposed by the Trump administration in his recent shareholder letter, warning investors they will lead to higher prices and slower economic growth. "The recent tariffs will likely increase inflation and are causing many to consider a greater probability of recession," he said.

Similarly, BlackRock CEO Larry Fink recently commented, "Most CEOs I talk to would say we are probably in a recession right now." He also criticized the reciprocal tariffs imposed by the Trump administration. "The president has been focusing on areas that in my mind in the short run are very inflationary and destabilizing the economy."

Major banks and asset managers have insight into important consumer finance metrics like account balances, loan defaults, and spending. Stephen Biggar at Argus Research recently commented, "Banks are a reflection of the economy -- if the economy worsens, their results will follow."

For that reason, commentary from JPMorgan, Morgan Stanley, Wells Fargo, and BlackRock on Friday could hold important clues as to how consumers feel about the economy. Signs that consumer sentiment or financial health is deteriorating could send the stock market lower, perhaps substantially.

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Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.