(Updates to afternoon US trading, adds market details)

* Carnival Corp ( CCL ) drops on cutting annual adjusted profit

forecast

* Megacaps biggest drag on S&P 500

* Indexes down: Dow 1.45%, S&P 500 1.42%, Nasdaq 1.97%

By Chuck Mikolajczak and Purvi Agarwal

March 27 (Reuters) - U.S. stocks tumbled on Friday, with

each of the three major U.S. indexes falling to their lowest

levels in over six months as megacap stocks provided the biggest

drag, as the month-long Middle East war continued to stifle risk

appetite.

Markets took little solace from U.S. President Donald Trump's

announcement that he gave Iran another 10 days to reopen the

Strait of Hormuz or face the destruction of its energy plants,

after Iran rejected his proposals to end the war he launched

together with Israel.

Secretary of State Marco Rubio said the U.S. could achieve its

objectives in Iran without the use of any ground troops and

expected its operation to conclude in a matter of weeks, despite

recent deployments of additional forces to the region.

U.S. crude rose 4.45% to $98.68 a barrel and Brent

rose to $112.16 per barrel but they were little changed

on the week.

The Dow, S&P 500 and Nasdaq were each poised for their fifth

straight weekly decline, the longest such streak in nearly four

years. On Thursday, the Nasdaq confirmed it was in correction

territory - commonly defined as a drop of 10% from its prior

high. The Russell 2000, which was the first on the

correction path, confirmed it last Friday.

"Clearly, the overall tone has turned very negative and now

we have broken down into correction territory," said Ken

Polcari, partner and chief market strategist at Slatestone

Wealth in Jupiter, Florida.

"In the end, I would view this as a big opportunity, but

would not be surprised if we see a drawdown anywhere between 15%

to 20% before it is over."

The Dow Jones Industrial Average fell 666.61 points,

or 1.45%, to 45,293.53, the S&P 500 lost 91.89 points, or

1.42%, to 6,385.27 and the Nasdaq Composite lost 420.94

points, or 1.97%, to 20,987.14.

The CBOE Volatility Index, considered Wall Street's

fear gauge, was up 3.41 points at 30.85.

Megacaps were the biggest drag on the benchmark S&P index,

with Nvidia ( NVDA ) down nearly 2% as the biggest weight, while

Amazon ( AMZN ) dropped more than 3%.

Software shares were also under renewed selling pressure

with the S&P 500 software and services index off

nearly 3% as it touched its lowest level since April 7.

Along with pressure from Amazon ( AMZN ), consumer discretionary stocks

lost nearly 3% as the worst-performing of the 11 major

S&P sectors as cruise operator Carnival slumped nearly

6% after cutting its annual adjusted profit forecast. Fellow

cruise operator Norwegian fell almost 7%.

The surge in oil prices along with other products such as

fertilizer as a result of the Iran war has fanned inflation

fears and dampened expectations that the Federal Reserve and

other central banks have room to lower interest rates.

Money market participants are not pricing in any easing from the

U.S. Federal Reserve this year, compared with expectations of

two cuts before the conflict broke out, according to CME's

FedWatch Tool. Markets are now pricing in a 25.5% chance for a

hike of at least 25 basis points at the Fed's October meeting.

Philadelphia Fed President Anna Paulson acknowledged the

risks to the economy from the war, but did not specify what it

meant for monetary policy in the near term.

U.S. consumer sentiment eased to a three-month low in March,

raising concerns about the economy due to the Middle East war.

Declining issues outnumbered advancers by a 2.91-to-1 ratio

on the NYSE and by a 3.44-to-1 ratio on the Nasdaq.

The S&P 500 posted 22 new 52-week highs and 19 new lows,

while the Nasdaq Composite recorded 22 new highs and 314 new

lows.