Wall Street Mixed on Hot CPI and Record-Low Consumer Sentiment; Europe Edges Higher

Wall Street closed mixed on Friday, April 10, as investors digested a hot headline CPI print and the worst consumer sentiment reading on record. The Nasdaq Composite eked out a gain of 0.35%, buoyed by tech resilience, while the Dow Jones Industrial Average fell 0.56%. In Europe, the STOXX 600 added 0.37% to extend its post-ceasefire weekly winning streak. The session underscored a market caught between ceasefire optimism and the visible economic cost of the Iran conflict.

US Markets: Inflation Surge Meets Record-Low Confidence

March CPI — Energy Drives the Headline

The Bureau of Labor Statistics reported that the all-items Consumer Price Index rose 0.9% month-over-month in March, pushing the 12-month inflation rate to 3.3% — its highest level in two years. Nearly all of the headline shock came from energy: gasoline prices surged 21.2% in a single month, and the broader energy component jumped 10.9%, the largest monthly energy increase in decades.

The silver lining was in the core reading. Excluding food and energy, CPI rose just 0.2% m/m, pulling the year-over-year core rate down to 2.6%. Food inflation was essentially flat (+0.01%), and shelter costs rose a more moderate 0.27%. The divergence suggests the inflationary pressure is almost entirely war-driven rather than broad-based — a crucial distinction for Federal Reserve policy.

Michigan Consumer Sentiment Collapses to Record Low

The University of Michigan’s preliminary April consumer sentiment index plunged to 47.6, the lowest reading in the survey’s history. That represents a 10.7% collapse from March. Both current conditions and expectations sub-indices posted double-digit monthly declines.

One-year inflation expectations spiked to 4.8%, up a full percentage point from March and the highest since August 2025. Five-year expectations climbed to 3.4%. Survey director Joanne Hsu noted that “many consumers blame the Iran conflict for unfavorable changes to the economy,” but emphasized that most interviews were completed before the April 7 ceasefire. Sentiment could improve materially as the truce holds and energy costs moderate.

Index Performance and Sector Divergence

Index	Close	Change	%
Dow Jones	47,916.33	−269.47	−0.56%
S&P 500	6,816.79	−7.87	−0.12%
Nasdaq Composite	22,902.89	+80.48	+0.35%
Russell 2000	2,630.93	−5.38	−0.20%
VIX	19.23	−0.26	−1.33%

The key dynamic was a clear rotation away from cyclicals toward growth. The Dow, heavy on industrial and financial names most exposed to energy-cost pass-through, lagged. The Nasdaq’s gain reflected strength in mega-cap tech — companies with strong pricing power and lower direct energy exposure. The VIX dipped to 19.23, remaining below pre-war levels for a second straight session and signaling that options markets continue to price in a durable ceasefire.

One notable sector story: cybersecurity stocks sold off after Anthropic unveiled its Mythos AI model, which demonstrated the ability to detect critical software vulnerabilities missed by legacy systems. The development raised questions about the long-term competitive moat of traditional security vendors.

European Markets: STOXX 600 Extends Post-Ceasefire Gains

Index	Close	Change	%
STOXX 600	614.84	+2.25	+0.37%
Euro Stoxx 50	5,919.35	+23.06	+0.39%
DAX	23,803.95	−3.04	−0.01%
FTSE 100	10,600.53	−2.95	−0.03%
CAC 40	8,259.60	+13.80	+0.17%
IBEX 35	18,204.30	+99.40	+0.55%
FTSE MIB	47,609.36	+281.37	+0.59%

European equities finished the week on a cautiously positive note, with the STOXX 600 closing at 614.84 (+0.37%) for its fourth consecutive session of gains. The pan-European benchmark capped one of its strongest weeks since the ceasefire was announced on April 7.

Southern European markets outperformed decisively. Italy’s FTSE MIB rose 0.59% and Spain’s IBEX 35 gained 0.55%, benefiting from their export-heavy economies and a weaker euro that supports competitiveness. Austria’s ATX surged 2.80% and Hungary’s Budapest SE jumped 3.79%, reflecting a catch-up rally in Central European markets that had been hit hardest during the conflict.

Core European indices were nearly flat — the DAX closed down just 3 points (−0.01%) and the FTSE 100 slipped 0.03%. The FT noted that European stocks remain the relative losers in the Iran war fallout, as the region’s heavier dependence on energy imports and proximity to Middle East disruption continue to weigh.

European bond markets were steady. The German 10-year Bund yield edged up 0.5 basis points to 3.054%, while the UK 10-year Gilt yield dipped fractionally to 4.833%.

Macro Variables: Oil, Gold, the Dollar, and Treasuries

Oil: Still Near $100 but Stabilizing

WTI crude closed near $98.54 per barrel, up 0.6% on the day. Brent crude was virtually flat at $95.86. Despite the ceasefire, oil markets remain elevated because the Strait of Hormuz — through which roughly 20% of global oil transits — is still operating at a fraction of normal capacity. Of the roughly 14 vessels that have transited the chokepoint since the ceasefire, at least nine had ties to Tehran, according to the Financial Times. Saudi production remains curtailed by roughly 600,000 barrels per day due to Iranian attacks on the kingdom’s East-West pipeline and production facilities.

Gold: Holding Above $4,770

Gold futures settled near $4,775, up 0.24% as continued dollar weakness and residual geopolitical hedging supported the metal. Gold gained approximately 2.3% on the week.

Dollar: Biggest Weekly Drop Since January

The US Dollar Index (DXY) fell 0.22% to 98.65, extending what is shaping up to be its largest weekly decline since January. The dollar’s weakness reflects the war-induced inflation headache — which complicates the Fed’s ability to cut rates — and a broader structural narrative. The Financial Times argued that the Iran conflict has exposed the weakness of the dollar as global actors seek alternatives. EUR/USD traded at 1.172 and GBP/USD firmed to 1.346.

US Treasuries: Yields Edge Higher on Inflation Data

The US 10-year Treasury yield rose 2.7 basis points to 4.316%, reflecting the hotter CPI print. The 2-year yield was at 3.799%. The yield curve remained in a normal upward slope, with the 2s10s spread near +50 basis points. A Reuters poll found that strategists have nudged yield forecasts higher but still cling to a benign inflation view, expecting war-driven price pressures to prove transitory once Hormuz traffic normalizes.

Iran Ceasefire Update: Day 4 — Fragile but Holding

The two-week ceasefire announced by President Trump on April 7 entered its fourth day. The key development was the announcement that Lebanon and Israel have agreed to talks in Washington next week — the first direct negotiations between the two countries in more than four decades. VP Vance is leading US diplomatic efforts, with US-Iran talks in Pakistan also on the schedule for this weekend.

However, the physical reality on the ground remains challenging. Hormuz traffic is still less than 10% of normal levels, and the Financial Times reported that investors are warning the war will leave a long-term “scar” on Wall Street, with commodity prices and bond yields unlikely to return to pre-conflict levels quickly.

What to Watch Next Week

• Ceasefire negotiations: The US-Iran talks in Pakistan and Israel-Lebanon talks in Washington will be the single biggest catalyst. Any breakdown could reverse the week’s recovery instantly.
• Earnings season begins: Major US banks are set to report, providing a first read on how the conflict has affected financial sector health, trading revenues, and loan loss provisions.
• Fed speakers: Multiple FOMC members are scheduled to speak. Watch for commentary on how the March CPI data — and the core vs. headline divergence — influences rate expectations. Minutes from the March meeting already showed growing support for potential rate hikes if inflation persists.
• Hormuz traffic normalization: Any signs of broader commercial vessel access would be a significant positive for oil markets and inflation expectations.
• China data: Q1 GDP and March activity indicators are due, offering a window into how the conflict and ongoing trade tensions are affecting the world’s second-largest economy.