U.S. stocks showed mixed performance in late Friday trading, with major indexes poised to secure solid weekly advances. Traders remained focused on the fragile two-week ceasefire agreement between the U.S. and Iran. March CPI data indicated a 3.3% increase, suggesting that the U.S.-Israel conflict with Iran has intensified inflationary pressures in the United States, leading the April consumer confidence index to hit a record low.
The Dow Jones Industrial Average fell 251.49 points, or 0.52%, to 47,934.31. The Nasdaq Composite gained 52.68 points, or 0.23%, to 22,875.10. The S&P 500 declined 10.08 points, or 0.15%, to 6,814.58.
All major averages are on track to post robust weekly gains. As of Thursday's close, the S&P 500 had risen more than 3%, positioning it for its best weekly performance since November. The Dow Jones Industrial Average has also climbed over 3% for the week, while the Nasdaq is set for a gain exceeding 4%.
On Thursday, former U.S. President Donald Trump warned Iran against imposing tolls on oil tankers passing through the Strait of Hormuz. In a post on Truth Social, he stated, "They better not do it, and if they are doing it, they better stop immediately!"
Oil prices held relatively steady amid persistent concerns over the potential reopening of the strait. West Texas Intermediate crude futures recently traded above $97 per barrel, while the international benchmark Brent crude futures traded above $95.
Stocks rose in the previous session, extending the week's gains, following Trump's agreement to pause hostilities against Iran for two weeks. Oil prices retreated from daily highs after Israeli Prime Minister Benjamin Netanyahu stated the country had agreed to negotiate with Lebanon "as soon as possible," coinciding with a rise in the S&P 500.
Mohammad Baqer Kalibaf, Speaker of Iran's Parliament, noted that Israel's continued attacks on Lebanon violate the U.S.-Iran ceasefire agreement.
U.K. Prime Minister Keir Starmer recently described Israel's order to strike Lebanon as "wrong." He also expressed being "weary" of fluctuations in British energy bills due to actions by Trump and Russian President Vladimir Putin.
On Tuesday, Trump agreed to extend his deadline for Iran to reopen the strait by two weeks. The five-week-long Middle Eastern conflict has led to the closure of this critical waterway.
Markets surged on Wednesday following news of the ceasefire, with all three major indexes climbing more than 2%. The Dow Jones recorded its best single-day performance since April 2025.
Stephen Parker, Co-Head of Global Investment Strategy at J.P. Morgan Private Bank, believes this relief rally has staying power.
"The pullback we've seen in equity markets, particularly in the U.S., might feel insufficient given the volatility and shock in energy markets, but I think it reflects the market's view that energy prices are likely to decline," he told media outlets on Thursday afternoon.
"Our base case is that energy prices will continue to gradually move lower over the next three to six months," he added. "Growth will take a slight hit, inflation will edge up a bit, but overall, this remains a very favorable environment for equities, especially as we head into earnings season, which we believe will be very positive."
On the economic data front Friday, a report from the U.S. Bureau of Labor Statistics showed consumer prices rose significantly in March, driven by soaring energy costs resulting from the Iran conflict, pushing the Federal Reserve further from its inflation target. However, core inflation remained relatively moderate.
Seasonally adjusted consumer prices increased 0.9% for the month, pushing the annual inflation rate to 3.3%, largely driven by a 10.9% surge in energy prices. Both figures matched Dow Jones consensus estimates. The annual rate was the highest since April 2024, up from 2.4% in February.
Excluding food and energy, however, core price increases were much smaller—rising just 0.2% monthly and 2.6% annually, both 0.1 percentage points below expectations, indicating more manageable underlying inflation. Some deflationary trends even appeared, with monthly declines in healthcare, personal care, and used cars and trucks.
The Bureau of Labor Statistics stated the Iran conflict was a decisive factor in the month's inflation reading, with gasoline prices surging 21.2%, accounting for nearly three-quarters of the overall price increase.
Energy prices have moderated somewhat in April since the fighting that erupted in late February established a fragile peace via the U.S.-Iran ceasefire. Fed officials are likely to look past the March price surge and focus more on the underlying inflation path—which has now remained above target for five consecutive years.
Markets had largely priced in little chance of interest rate cuts for the remainder of 2026. Although Fed officials indicated a preference for a 25-basis-point cut at their March meeting, the timing remains highly uncertain.
A University of Michigan survey released Friday revealed U.S. consumer sentiment hit a record low in April.
The preliminary April consumer sentiment index fell to 47.6, the lowest reading in the survey's 74-year history. This figure was well below economists' expectation of 51.5 and lower than the March reading of 53.3.
The decline in sentiment was broad-based, affecting all respondent groups across income, age, and political affiliation. Joanne Hsu, Director of the University of Michigan Surveys of Consumers, noted that war-induced energy price spikes and severe financial market volatility were primary drivers of the collapse in confidence. Data showed respondents' expectations for short-term economic prospects plummeted 14%, while expectations for their personal financial situation over the next year fell 10%.
Simultaneously, consumers' inflation expectations deteriorated sharply. One-year ahead inflation expectations jumped to 3.8% from 3.4% in March, marking the largest single-month increase in nearly a year. This combination of falling confidence and rising inflation expectations signals a serious risk of stagflation for the U.S. economy.
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