US STOCKS-Wall Street slides as Mideast de-escalation uncertainty weighs on sentiment

By Twesha Dikshit and Purvi Agarwal

March 26 (Reuters) - Wall Street's main indexes dropped on Thursday following gains in the previous session, as conflicting signals from the U.S. and Iran on the prospects of a de-escalation in the Middle East kept investors on edge.

A U.S. proposal for ending nearly four weeks of fighting is "one-sided and unfair", a senior Iranian official told Reuters on Thursday, while also stressing that diplomacy had not ended despite the current lack of a realistic plan for peace talks.

"There's just a lot of confusion as to what is really happening. Is the administration negotiating with Iran or there's just confusion around that? That's why you're seeing this back and forth," said Hank Smith, director and head of investment strategy at Haverford Trust.

"But the market has held up really well partly because there is a fear of missing out on a rebound when the war ends."

At 12:00 p.m. ET, the Dow Jones Industrial Average .DJI fell 202.81 points, or 0.45%, to 46,221.54, the S&P 500 .SPX lost 50.27 points, or 0.77%, to 6,540.93 and the Nasdaq Composite .IXIC lost 229.53 points, or 1.05%, to 21,700.29.

Jurors in the first two trials from a growing wave of lawsuits targeting social media firms over harm to children have found Meta META.O and Alphabet's GOOGL.O Google liable, sending their shares down 6.3% and 2.1% respectively, to multi-month lows.

They bogged down the S&P 500 communication services index .SPLRCL by 2.4%.

Technology stocks were the biggest weights on the S&P 500 .SPLRCT, falling 1.2%. Memory chipmakers continued to sell off, with Micron Technology MU.O, SanDisk SNDK.O and Western Digital WDC.O down between 4% and 7%. The Philadelphia SE Semiconductor index .SOX lost almost 2.7%, after three sessions of gains.

The escalating conflict in the Middle East has knocked the global economy off a stronger growth path, the OECD warned on Thursday, with a closure of the Strait of Hormuz threatening to push inflation sharply higher.

Oil prices rose by over 4% on the day, making the S&P 500 energy sector .SPNY the biggest percentage gainer on the benchmark index.

Central banks have been put in a tough spot with regard to interest rates, as money market participants no longer price in any easing from the U.S. Federal Reserve this year. Two rate cuts had been expected before the Iran conflict erupted, according to the CME Group's FedWatch Tool.

Data showed new applications for U.S. unemployment benefits rose slightly last week, suggesting a stable labor market and allowing the Fed to hold rates steady while monitoring the impact of the Iran war.

Comments from Fed officials Lisa Cook, Stephen Miran, Michael Barr and Philip Jefferson are on deck through the day.

Among individual movers, shares of Olaplex OLPX.O jumped 51% after Germany's Henkel HNKG.DE agreed to buy the hair-care brand in a $1.4 billion deal.

U.S.-listed shares of gold miners slipped as bullion prices XAU= declined more than 1%. Sibanye Stillwater SBSW.N lost 1.7% and Harmony Gold HMY.N shed 1.9%.

Declining issues outnumbered advancers by a 1.74-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and five new lows, while the Nasdaq Composite recorded 39 new highs and 103 new lows.