* Indexes off: Dow 0.45%, S&P 500 0.49%, Nasdaq 0.67%

* Micron Technology ( MU ) down 4% as higher spending plans draw

scrutiny

* Brent crude near $112/barrel on Middle East tensions,

clouding inflation outlook

* Small-cap Russell 2000 briefly slips 10% from record

high

(Updates after market open, prices throughout)

By Johann M Cherian and Utkarsh Hathi

March 19 (Reuters) - Wall Street's main indexes fell on

Thursday as a surge in crude prices revived inflation fears and

the Federal Reserve's cautious stance on interest rate cuts

weighed on sentiment.

The rate-sensitive Russell 2000 index dropped 0.4%,

having briefly touched a 10% loss from its all-time intraday

high earlier in the session. An index falling 10% or more below

its record high on a close-to-close basis is called a

correction.

A strong forecast from Micron Technology ( MU ) did little to

uplift sentiment, with its shares dropping 4.4%, as investors

mulled the chip company's higher spending plans given elevated

borrowing costs.

Other memory chip stocks that have rallied this year were

also knocked down. SanDisk ( SNDK ) and Applied Digital ( APLD )

fell more than 2% each, while AI leader Nvidia ( NVDA ) dipped

1.5%.

Brent crude prices hovered around $112 a barrel after

Iran attacked energy facilities across the Middle East in

retaliation to Israel's strike on its South Pars gas field. The

U.S. benchmark, however, was trading at its widest discount to

Brent in 11 years due to releases from U.S. strategic reserves

and higher freight costs.

The Fed left rates unchanged on Wednesday and Chair Jerome

Powell flagged higher inflation ahead. He added it was too soon

to gauge the repercussions of the war on the economy and stuck

to the prior forecast of one 25-basis-point rate cut this year.

"Oil prices are now driving not just stock prices, but

Federal Reserve policy, and while this may be a short-term

phenomenon, it's the one the market is dealing with right now,"

said Dennis Follmer, chief investment officer at Montis

Financial, in a note.

Morgan Stanley joined Goldman Sachs and Barclays in pushing back

its forecast for an interest rate cut to September from June.

Traders are no longer pricing in a rate cut for this year and

LSEG-compiled data now points to a dovish move only in mid-2027.

At 10:04 a.m. ET, the Dow Jones Industrial Average fell

218.84 points, or 0.45%, to 46,017.96, the S&P 500 lost

32.62 points, or 0.49%, to 6,592.08 and the Nasdaq Composite

lost 148.57 points, or 0.67%, to 22,004.27.

Wall Street's fear gauge, the CBOE volatility index,

spiked 0.79 points to 25.88. The Middle East conflict has

exacerbated volatility in global markets, but U.S. stocks have

been buoyed by a rebound in technology shares and on relief that

the U.S. is a net energy exporter.

Stocks and bonds slid following the Fed verdict and all the

three main indexes are trading below their 200-day moving

averages (DMA). The 200-DMA is a technical indicator reflecting

long-term momentum.

Eight of the 11 S&P 500 sector indexes were in the red, with

materials leading declines with a 2.2% drop. Prices of

precious metals fell, with miners Newmont ( NEM ) and

Freeport-McMoRan dropping 8.7% and 7.5% respectively.

Energy price-sensitive travel stocks such as Delta Air

and United fell more than 1%, while cruise stocks such

as Norwegian and Carnival were down 0.5%.

Investors will be keen on any potential commentary from

policymakers later in the day.

Meanwhile, weekly jobless claims unexpectedly fell last week,

pointing to stable labor market conditions and a rebound in job

growth in March.

Also in focus will be a U.S.-Japan summit that President Donald

Trump may use to press for help on the war in Iran after his

earlier call on allies to safeguard passage through the

strategic Strait of Hormuz went unanswered.

Declining issues outnumbered advancers by a 2.17-to-1 ratio on

the NYSE and by a 2.02-to-1 ratio on the Nasdaq.

The S&P 500 posted 11 new 52-week highs and 17 new lows while

the Nasdaq Composite recorded 18 new highs and 181 new lows.