The latest April report on U.S. consumer confidence paints a bleak picture, showcasing a sharp decline in overall morale and a disturbing surge in inflation expectations among American consumers, according to data released Friday by the University of Michigan.

"A slight uptick in inflation expectations in April reflects some frustration that the inflation slowdown may have stalled.” Surveys of Consumers Director Joanne Hsu, said.

UMich Consumer Sentiment Report For March: Key Highlights

The University of Michigan consumer sentiment index eased from 79.4 to 77.9 in April, missing expectations of 79.

The sub-index for consumer expectations inched marginally down from 77.4 to 77, below the expected 77.6.

The sub-index for current conditions fell from 82.5 to 79.3, below the expected 82.2.

The year-ahead inflation expectations rose from 2.9% to 3.1%. Long-term inflation expectations rose from 2.8% to 3%.

Economist Takeaways

According to Joanne Hsu, “sentiment moved sideways for the fourth straight month, as consumers perceived few meaningful developments in the economy.”

She highlighted risks the progress on disinflation may have stalled, as inflation expectations soared.

“Overall, consumers are reserving judgment about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy,” she added.

Market Reactions

Stocks extended early session losses after the release, with the SPDR S&P 500 ETF Trust ( SPY ) down 0.8% and the tech-heavy Invesco QQQ Trust down 1.1%.

Gold prices, as tracked by the SPDR Gold Trust , rose further, up 1.5%, with the yellow metal breaking fresh record highs above $2,400 per ounce.

Treasury yields saw a material decline as investors flocked to safe havens. The 10-year yield fell 10 basis points, retracing half of the post-inflation move.

The iShares 20+ Year Treasury Bond ETF ( TLT ) rallied 1.2%.

Sector-wise, only the Energy Select Sector SPDR Fund ( XLE ) managed to trade in the green, buoyed by rising oil prices, with the West Texas Intermediate (WTI) soaring above $87 a barrel on rising tensions in the Middle East.

Read now: Inflation Upends Fed’s Plans: When Do Wall Street Analysts Expect First Interest Rate Cut?