US STOCKS-Wall Street falls as Israel-Iran conflict hits risk appetite

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By Kanchana Chakravarty and Sukriti Gupta

June 13 (Reuters) - Wall Street's main indexes fell on Friday after Israel's deadly strike on Iranian nuclear facilities inflamed tensions in the oil-rich Middle East and battered risk sentiment across global markets.

Israel has warned that the widescale strikes were the start of a prolonged operation to prevent Tehran from building an atomic weapon. Iran has promised a harsh response.

Oil prices surged nearly 7% on fears the conflict could disrupt crude supply from the Middle East. U.S. energy stocks rose in tandem, with Exxon XOM.N up 1.7%.

Airline stocks dropped as fuel costs could surge if supply bottlenecks materialize. Delta Air Lines DAL.N was down 3.7%, United Airlines UAL.O dropped 4.4%, and American Airlines AAL.O declined 4.7%.

Defense stocks climbed, with Lockheed Martin LMT.N, RTX Corporation RTX.N, Northrop Grumman NOC.N gaining between 2.2% and 3.2%.

"We have major domestic policy uncertainty and now on top of that, you have geopolitical unrest, which not only is impacting oil markets, but the broader risk premium," said Eric Teal, chief investment officer at Comerica Wealth Management.

Washington said it had no part in the operation, but President Donald Trump suggested Iran had brought the attack on itself by resisting U.S. demands to restrict its nuclear program.

Trump also urged Iran to make a deal, saying "the next already planned attacks" will be "even more brutal".

Israeli Prime Minister Benjamin Netanyahu's office said he would speak to Trump later in the day.

At 10:13 a.m. ET, the Dow Jones Industrial Average .DJI fell 659.45 points, or 1.52%, to 42,313.10, the S&P 500 .SPX lost 60.38 points, or 1.00%, to 5,984.88 and the Nasdaq Composite .IXIC lost 227.71 points, or 1.16%, to 19,435.01.

Ten of the 11 major S&P 500 sub-sectors fell, with only energy .SPNY stocks gaining 1.2%. Financials .SPSY declined the most, with a 2.1% fall. Information technology .SPLRCT lost 1.3%, weighed down by Adobe's ADBE.O shares.

Adobe fell 6.6% despite the Photoshop maker raising its full-year results forecast.

Most megacap and growth stocks declined. Nvidia NVDA.O was down 2.1%, Apple AAPL.O fell 1.5% and Amazon AMZN.O lost 1.3%.

Visa V.N shares hit an over four-week low and were last down 5.9%.

U.S.-listed shares of gold miners rose tracking a rise in bullion prices. Newmont NEM.N gained 2.2%, while AngloGold Ashanti AU.N rose 2.1%.

The S&P 500 .SPX remains 2.6% below its record high reached earlier this year, following stellar monthly gains in May driven by upbeat corporate earnings and a softening in Trump's trade stance.

The tech-heavy Nasdaq .IXIC is about 3.8% off its record closing high reached in December last year.

A tame consumer price report, softer-than-expected producer price data and largely unchanged initial jobless claims earlier this week helped calm investor jitters around tariff-driven price pressures. However, Federal Reserve policymakers are widely expected to keep rates unchanged at their meeting next week.

A University of Michigan survey showed consumer sentiment increased to 60.5 for June from the previous month, according to a preliminary estimate.

Declining issues outnumbered advancers by a 3.88-to-1 ratio on the NYSE and by a 4.4-to-1 ratio on the Nasdaq.

The S&P 500 posted 8 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 18 new highs and 70 new lows.

(Reporting by Kanchana Chakravarty and Sukriti Gupta in Bengaluru; Editing by Devika Syamnath)

((Kanchana.Chakravarty@thomsonreuters.com;))