(Bloomberg) -- US equities sold off sharply on Friday, sending tech stocks to the biggest weekly loss in 17 months, due to tensions in the Middle East and worries over the outlook for interest rates.

The S&P 500 index closed down 0.9%, dropping for the sixth straight session and the third straight week, leaving it more than 5% below its March 28 closing high. The Nasdaq 100 declined 2.1%, and recorded the deepest weekly drop since November 2022. The Cboe Volatility Index climbed close to 19. Tech heavyweights Nvidia Corp., Meta Platforms Inc. and Amazon.com Inc. were among the biggest contributors to the losses in both the stock indexes on Friday.

The market was weighed down by geopolitical tensions as Israel launched a retaliatory strike on Iran following last week’s missile and drone barrage from Tehran, according to two US officials, though media from both countries appeared to downplay the significance of the incident.

“Geopolitical and political uncertainty join inflation, rates, and the Fed in pressuring markets, driving a rapid and dramatic shift in the complexion of markets and the attitude of investors,” said Mark Hackett, chief of investment research at Nationwide. “Next week is critical for the tug-of-war between bulls and bears, with a ramp in earnings releases and the release of the PCE deflator.”

Read more: Tesla, Boeing Rocked as Deliveries Slide: US Earnings Week Ahead

Hawkish comments from Federal Reserve officials Thursday contributed to the negative sentiment by fueling speculation that the start of its rate cuts could be pushed back. 

Ulrich Urbahn, head of multi-asset strategy and research at Berenberg, said he remains slightly underweight US stocks as it’s “the most crowded and expensive market.”

“We think the upside for US equities is capped until we have more clarity after the US elections,” he said. “We expect some volatility until then in a range-bound market.”

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