US stock indices declined on Friday, with both the SP 500 and Nasdaq falling to their lowest levels in more than six months, led by losses in technology stocks, as the ongoing war in the Middle East weighed on investor sentiment.

US President Donald Trump granted Iran an additional 10-day deadline to reopen the Strait of Hormuz or face the destruction of its energy facilities, after Tehran rejected his proposals to end the war launched in coordination with Israel.

Despite the extension, markets failed to stabilize, as investors questioned the likelihood of reaching an agreement, while oil prices rose by more than 2%.

Weekly losses persist amid unprecedented uncertainty

The SP 500 and Nasdaq remained on track to post a fifth consecutive weekly loss, while the Dow Jones Industrial Average is expected to end the week little changed.

Bill Mann, Chief Investment Strategist at Motley Fool Asset Management, said: We are facing an unprecedented level of uncertainty the ambiguity of the current war is far greater than any conflict over the past 50 to 60 years.

The CBOE Volatility Index, known as Wall Streets fear gauge, rose by 1.57 points to 29.01.

Market performance during the session

As of 11:40 AM New York time:

The Dow Jones index fell by 305.57 points, or 0.66%, to 45,651.29 points

The SP 500 declined by 45.10 points, or 0.70%, to 6,432.06 points

The Nasdaq dropped by 236.47 points, or 1.10%, to 21,171.61 points

Technology sector leads losses

The technology sector was the hardest hit, declining 0.9%, with Nvidia falling 1% and Microsoft dropping 1.7%.

Software stocks also came under renewed selling pressure, with the iShares Expanded Tech-Software ETF falling 3.4% to its lowest level in more than a month.

Alphabet declined 1.1%, while Meta fell 3.5%, weighing on the SP 500 communication services sector, which dropped 1.3%.

Additional pressure from other sectors

Consumer discretionary stocks fell 2%, while Carnival shares dropped about 4% after the company cut its full-year adjusted earnings forecast.

The Nasdaq had already entered correction territory on Thursday, after falling more than 10% from its record highs, while the Russell 2000 had entered that phase last week.

Inflation and monetary policy under pressure

Rising oil prices due to the war have intensified inflation concerns, complicating the path for interest rate cuts by central banks.

Data from the CME FedWatch tool showed that markets no longer expect any rate cuts from the Federal Reserve this year, compared to expectations of two cuts before the conflict, with a 32% probability of a rate hike in December.

US consumer confidence also declined to a three-month low in March, reflecting growing concerns about the economy due to the war.

Meanwhile, Unity Software shares surged 10.5% after the company reported preliminary first-quarter revenue that exceeded analysts expectations.

On the broader market, declining stocks outnumbered advancers by 1.85 to 1 on the New York Stock Exchange and by 2.5 to 1 on Nasdaq, while the SP 500 recorded about 21 new 52-week highs versus 16 new lows, and Nasdaq recorded 21 highs versus 262 new lows.