Stocks tumble, Dow confirms correction, as Middle East war weighs

STORY: U.S. stocks closed sharply lower on Friday, with the Dow dropping about one and three-quarters percent to confirm it is in correction territory, the S&P 500 shedding one and two-thirds percent and the Nasdaq plummeting more than 2%.All three indexes suffered their fifth straight weekly decline, the longest such streak in nearly four years.Friday's selloff came a day after the Nasdaq confirmed it was in correction territory, which followed the small-cap Russell 2000's correction one week ago.Markets on Friday took little solace from President Donald Trump's announcement that he gave Iran another 10 days to reopen the Strait of Hormuz or face the destruction of its energy plants. This came after Iran rejected his proposals to end the war he launched in tandem with Israel.Alexander Morris is CEO and chief investment officer at F/m Investments.“Investors are now feeling what happens when war breaks out, and the economic prosperity that we've enjoyed starts to be questioned. We have to put this in context with history. It's normal throughout the course of any year, we see a correction of 10% for a period of time. [FLASH] But I think in general, equity markets feel not so great, bond markets feel not so great. But that's really symptom. That's not actual disease. That's really a byproduct of most investors focusing on the price of oil and becoming armchair geo-politicians less so than the traders they used to be. If we give this some time, in a few weeks, we probably see this work itself out.”Megacaps were the biggest drag on the S&P 500, with Nvidia down more than 2% as the biggest weight, while Amazon dropped 4%.Software shares also came under renewed selling pressure, with the S&P 500 software and services index closing at its lowest level since November 6, 2023.Among other movers, cruise operator Carnival slumped more than 4% after cutting its annual adjusted profit forecast. Rival Norwegian Cruise Line tumbled nearly 7%.Meanwhile, money market participants who were pricing in two rate cuts from the Federal Reserve before the war broke out are now expecting none.Instead, markets are now pricing in a roughly 25% chance for a rate hike at the Fed's October meeting.