U.S. Stocks Mixed as Inflation Relief Offsets Ceasefire Concerns
U.S. stock markets traded mixed on Friday, as investor caution over a fragile Middle East ceasefire balanced out relief from a better-than-expected inflation report.
At 12:18 ET (16:18 GMT), the S&P 500 remained largely unchanged at 6,821.94 points. The Nasdaq Composite rose 0.4% to 22,905.44, while the Dow Jones Industrial Average declined 0.5% to 47,959.50.
Geopolitical Tensions Keep Markets on Edge
Geopolitical risks continued to weigh on sentiment. U.S. President Donald Trump warned that military action could resume if upcoming peace talks with Iran fail.
He stated that U.S. warships are prepared to act quickly, adding that clarity on the outcome of negotiations could emerge within the next 24 hours.
Inflation Data Provides Temporary Relief
Markets also reacted to the March inflation report, which came in broadly in line with expectations. Headline CPI rose 0.9% month-over-month and 3.3% year-over-year, slightly below forecasts.
The increase was largely driven by a sharp surge in energy prices. The energy index jumped 10.9% monthly, marking the biggest increase since September 2005, while gasoline prices surged 21.2%. Average gasoline prices have now exceeded $4 per gallon for the first time in over three years.
Core Inflation Eases Market Concerns
Despite the spike in headline inflation, core CPI offered some reassurance. Excluding food and energy, prices rose just 0.2% month-over-month and 2.6% year-over-year—both below expectations.
However, analysts caution that this relief may be short-lived, as the full impact of higher energy costs could become more evident in the coming months.
Consumer Sentiment Weakens Sharply
Economic data also revealed a sharp drop in consumer confidence. The University of Michigan’s consumer sentiment index fell 11% in April to 47.6, significantly below expectations.
Survey responses indicated that many consumers are increasingly concerned about the economic impact of the Iran conflict. Inflation expectations also jumped sharply, rising to 4.8% from 3.8% in the previous month.
Ceasefire Developments Support Risk Sentiment
Despite ongoing tensions, there have been some signs of diplomatic progress. Israeli Prime Minister Benjamin Netanyahu confirmed that talks with Lebanon are being explored, raising hopes for a broader de-escalation.
This optimism has supported a recent rally in U.S. equities, with markets posting a seven-day winning streak and the Dow returning to positive territory for the year.
Oil Supply Disruptions Continue
Meanwhile, disruptions in global oil supply remain a key concern. Shipping through the Strait of Hormuz continues at severely reduced levels, with traffic reportedly below 10% of normal volumes.
Iran has maintained strict controls over vessels, while attacks on Saudi energy infrastructure have further reduced oil output and pipeline capacity.
These supply constraints have pushed oil prices higher, with Brent crude rising 1.2% to $97.07 per barrel and WTI crude gaining 1.1% to $98.91.
Outlook: Markets Balance Inflation and Geopolitical Risks
While easing core inflation has provided short-term support, ongoing geopolitical risks and energy-driven inflation pressures continue to cloud the outlook.
Markets are expected to remain highly sensitive to both economic data and developments in U.S.-Iran negotiations in the coming days.
