(Updates with afternoon trading)

* Micron Technology ( MU ) drops as higher spending plans draw

scrutiny

* Brent crude climbs on Middle East tensions

* Small-cap Russell 2000 loses ground

* S&P 500 -0.68%, Nasdaq -0.77%, Dow -0.86%

By Noel Randewich and Utkarsh Hathi

March 19 (Reuters) - Wall Street fell on Thursday, with

declines in Micron Technology ( MU ) and Tesla, as worries about

inflation stemming from soaring oil prices left investors

pessimistic about the potential for future interest rate cuts.

Investors focused on warnings by Federal Reserve Chair Jerome

Powell on Wednesday that the economic outlook remains uncertain

amid a U.S.-Israeli war with Iran that has sent energy prices

soaring and created fears of inflation. The Fed left rates

unchanged, as expected.

Interest rate futures suggest traders see little chance of

interest rate cuts before mid-2027, according to the CME's

FedWatch tool.

Echoing the Fed, the Bank of England and European Central Bank

held their interest rates steady and pointed to uncertainty

arising from the Middle East conflict.

'A REAL INFLATION RISK'

"The market is digesting a little bit more of Powell and

what some other central banks said overnight, that this is a

real inflation risk," said Mike Dickson, head of research and

quantitative strategies at Horizon Investments in Charlotte,

North Carolina.

"The market isn't pricing in any rate hike, but it has

completely priced out all cuts this year."

Attacks on Iran's South Pars gas field, along with the world's

largest gas plant in Qatar as well as on oil refineries in Saudi

Arabia and Kuwait, sent Brent prices shooting above $119 a

barrel and further fanned inflation fears.

The small-cap Russell 2000 index dipped 0.1% and was

briefly down more than 10% from its January 22 record closing

high.

Micron Technology ( MU ) dropped 3.3% after the memory

chipmaker's quarterly forecast failed to impress investors who

have sent its shares soaring 56% this year on strong demand

related to AI.

Tesla slid 2.8%. The National Highway Traffic Safety

Administration escalated its probe into 3.2 million Tesla

vehicles with Full Self-Driving driver-assistance on concerns

the system may fail to detect or warn drivers in poor

visibility.

The S&P 500 was down 0.68% at 6,579.33 points.

The Nasdaq declined 0.77% to 21,982.25 points, while the Dow

Jones Industrial Average was down 0.86% at 45,829.71 points.

The S&P 500, Nasdaq and Dow were trading below their 200-day

moving averages, underscoring a loss of momentum in the market.

The S&P 500 has lost about 4% in 2026 and is trading at

four-month lows.

Ten of the 11 S&P 500 sector indexes declined on Thursday,

led lower by materials, down 2.21%, followed by a

1.38% loss in consumer discretionary.

Wall Street's fear gauge, the CBOE Volatility Index,

climbed 0.5 points to 24.6.

Prices of precious metals declined, weighing on miners Newmont ( NEM )

and Freeport-McMoRan ( FCX ), down 8.6% and 4.8%,

respectively.

Data on Thursday showed weekly jobless claims unexpectedly fell

last week, pointing to stable labor-market conditions and a

rebound in job growth in March.

Declining stocks outnumbered rising ones within the S&P 500

by a 2.7-to-one ratio.

The S&P 500 posted 16 new highs and 26 new lows; the Nasdaq

recorded 26 new highs and 259 new lows.