NEW YORK, March 20 (Xinhua) -- U.S. stocks ended significantly lower on Friday, with two major indices falling into correction territory as an escalating Middle East conflict and soaring Treasury yields battered investor sentiment.
The Dow Jones Industrial Average fell 0.96 percent to 45,577.47. The S&P 500 sank 1.51 percent to 6,506.48. The Nasdaq Composite Index shed 2.01 percent to 21,647.61.
Nine of the 11 primary S&P 500 sectors ended in the red. The utilities and real estate sectors led the laggards, dropping 4.11 percent and 3.15 percent, respectively, while financials and energy were the only positive sectors, rising 0.19 percent and 0.01 percent, respectively.
Meanwhile, both Nasdaq and the small-cap Russell 2000 index dropped more than 10 percent from their recent record highs, officially falling into a correction.
Amid the escalating conflict in the Middle East, the international benchmark Brent crude topped 112 U.S. dollars a barrel on Friday, while U.S. West Texas Intermediate traded over 98 dollars a barrel.
The oil price shock amplified fears that domestic inflation is being reignited, leading investors to price out expectations for near-term interest rate cuts by the Federal Reserve. This shifting outlook pushed the yield on the benchmark 10-year U.S. Treasury note to 4.39 percent, up sharply from Thursday's close above 4.25 percent.
Despite the broader market anxiety, Morgan Stanley's chief U.S. economist Michael Gapen said in a Friday note that growing fears of actual rate hikes this year are likely "overdone." "In light of higher oil prices, we revise our outlook for 2026 in favor of less growth, more inflation, higher unemployment, and later Fed cuts. Our outlook for two Fed rate cuts stands in stark contrast to current market pricing, which has hints of rate hikes," Gapen said.
In corporate developments, FedEx stock gained 0.77 percent after the package delivery giant raised its profit outlook. Nexstar Media Group rose 1.69 percent following regulatory approval for its merger with local television station operator Tegna.
