US STOCKS-Wall Street indexes mostly fall as Iran war widens

By Caroline Valetkevitch and Purvi Agarwal

March 30 (Reuters) - Major U.S. stock indexes mostly fell on Monday as U.S. President Donald Trump's new warning to Tehran and a widening of the Middle East war offset optimism over his comments on U.S. discussions with Iran.

Trump said the U.S. was in serious discussions with a "more reasonable regime" to end the war, but repeated his threat to open the Strait of Hormuz or risk U.S. attacks on Iranian oil wells and power plants. Iran described U.S. peace proposals as unrealistic.

At the same time, the conflict has been escalating. Yemen's Iran-backed Houthi militia entered the war over the weekend.

Investors have been rattled by uncertainties surrounding the Middle East war, which has caused oil prices to spike and has fanned inflation fears.

"The administration continues to send mixed messages," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off."

Meckler said investors may be looking for a technical "bottom" after recent selloffs.

All three of the major indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 .RUT have all confirmed correction territory, ending 10% lower from their record-high closes.

Technology stocks .SPLRCT were among the day's biggest drags on the S&P 500, with a semiconductor index .SOX falling 4.2%.

The Dow Jones Industrial Average .DJI rose 49.50 points, or 0.11%, to 45,216.14, the S&P 500 .SPX lost 25.13 points, or 0.39%, to 6,343.72 and the Nasdaq Composite .IXIC lost 153.72 points, or 0.73%, to 20,794.64.

Comments from Federal Reserve Chair Jerome Powell gave some support to stocks. Powell said longer-term inflation expectations appear to be holding despite the current energy shock, and the Fed does not yet need to make a decision on how to react to the latest troubles.

Money market participants have priced out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group's FedWatch Tool.

The S&P 500 energy index .SPNY ended down 0.9% even as oil prices settled higher on the day. Brent crude LCOc1 is on track for a record monthly rise and U.S. crude <CLc1 settled above $100 a barrel for the first time since 2022.

On the flip side, the financial index .SPSY gained 1.1% after the U.S. Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.

Shares of asset managers climbed, with Blackstone BX.N rising 3.3% and KKR KKR.N gaining 2.1%.

Declining issues outnumbered advancers by a 1.14-to-1 ratio on the NYSE. There were 147 new highs and 340 new lows on the NYSE.

On the Nasdaq, 2,021 stocks rose and 2,794 fell as declining issues outnumbered advancers by a 1.38-to-1 ratio.

Volume on U.S. exchanges was 18.85 billion shares, compared with the roughly 20 billion average for the full session over the last 20 trading days.