U.S. stocks were mixed during Friday's early session, with the Dow Jones Industrial Average declining 0.3%. Major indexes are on track for solid weekly gains as traders closely monitor the fragile two-week ceasefire agreement between the U.S. and Iran. The U.S. March CPI rose 3.3%, indicating that the U.S.-Israel conflict with Iran has intensified inflationary pressures in the United States.
The Dow fell 144.74 points, or 0.30%, to 48,041.06. The Nasdaq Composite rose 87.40 points, or 0.38%, to 22,909.82. The S&P 500 added 3.99 points, or 0.06%, to 6,828.65.
All major averages are poised for strong weekly advances. As of Thursday's close, the S&P 500 had climbed more than 3%, setting it up for its best weekly performance since November. The Dow Jones has also gained over 3% for the week, while the Nasdaq is on pace for an increase exceeding 4%.
Former U.S. President Donald Trump warned Iran on Thursday against imposing tolls on oil tankers transiting 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 were largely flat 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 and the S&P 500 advanced after Israeli Prime Minister Benjamin Netanyahu stated the country had agreed to negotiate with Lebanon "as soon as possible."
Mohammad Bagher Ghalibaf, Speaker of Iran's Parliament, noted that Israel's continued attacks on Lebanon violate the U.S.-Iran ceasefire agreement.
UK Prime Minister Keir Starmer recently called Israel's order to strike Lebanon "wrong." He also expressed being "weary" of British energy bills fluctuating due to the actions of 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.
Stocks surged on Wednesday following the ceasefire news, with all three major indexes climbing more than 2%. The Dow posted 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 relative to the volatility and shock in energy markets, but I think it reflects the market's view that energy prices are likely to fall," he told media outlets on Thursday afternoon.
"Our base case is that energy prices will continue to drift lower over the next three to six months," he added. "Growth will take a bit of a hit, inflation will be a touch higher, 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, pushed higher by soaring energy costs resulting from the Iran conflict, moving the Federal Reserve further away from its inflation target. However, core inflation remained relatively moderate.
The seasonally adjusted Consumer Price Index increased 0.9% for the month, pushing the annual inflation rate to 3.3%, driven primarily 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.
However, core price increases, which exclude food and energy, were much smaller—rising just 0.2% for the month and 2.6% year-over-year. Both core figures were 0.1 percentage points below expectations, suggesting more manageable underlying inflation. There were even signs of deflation, with monthly declines in medical care, personal care, and used cars and trucks.
The Bureau of Labor Statistics indicated the Iran conflict was a decisive factor in the month's inflation reading, with gasoline prices spiking 21.2%, accounting for nearly three-quarters of the overall price increase.
Energy prices have moderated 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 path of inflation, which has remained above the central bank's target for five consecutive years.
Markets had largely priced in little chance of 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 of any easing remains highly uncertain.
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