US STOCKS-Wall St extends losses as chip stocks slide, Treasury yields climb

* Indexes down: Dow 0.09%, S&P 500 0.4%, Nasdaq 0.8%

* Dominion Energy (D) rises on NextEra deal

* Regeneron slides after skin cancer drug combo misses trial goal (Updates with afternoon trading levels)

By Ragini Mathur and Utkarsh Hathi

May 18 (Reuters) - U.S. stock indexes extended losses on Monday, with the Nasdaq leading declines as semiconductor shares came under pressure, while surging Treasury yields and oil prices revived concerns that inflation and borrowing costs could remain elevated.

The 10-year Treasury yield, the benchmark for global borrowing costs, was at 4.630%, having climbed to its highest level since February 2025 earlier in the session.

The bond-market selloff was fueled by a surge in oil prices, which has stoked concerns of inflation potentially keeping borrowing costs elevated as efforts to end the Iran war appeared to stall.

Oil prices also moved higher, with Brent crude up 1.4%. Prices had briefly turned lower earlier in a volatile session after a report said the U.S. had proposed a temporary waiver on Iranian oil sanctions. Iranian officials did not immediately comment.

"Investors are looking at interest rates and oil and starting to question how much of an impact this is going to have," said Adam Turnquist, chief technical strategist at LPL Financial.

"On top of that, you've had a market that's rallied from March lows, so I think it's just the market taking a little bit of a breather and refocusing a little bit more on a complicated macro backdrop."

The heavyweight information technology sector led declines on the S&P 500, with chip stocks among the biggest drags.

The Philadelphia SE Semiconductor index fell over 2%.

The gains in financial shares helped limit losses on the Dow.

Wall Street had rallied sharply in recent weeks, with the benchmark S&P 500 and the Nasdaq reaching record highs, as enthusiasm around artificial intelligence helped investors look past the inflationary threat from surging oil prices and the Iran war.

That rally, however, lost momentum on Friday as a rout in the bond market pushed yields higher.

Traders are now pricing in a more than 40% chance that the U.S. Federal Reserve will raise interest rates by at least 25 basis points in January, according to CME's FedWatch tool, after last week's hotter-than-expected inflation readings.

At 12:04 p.m. ET, the Dow Jones Industrial Average fell 46.27 points, or 0.09%, to 49,479.90, the S&P 500 lost 31.42 points, or 0.42%, to 7,377.08 and the Nasdaq Composite lost 221.19 points, or 0.84%, to 26,003.96.

The world's most valuable company, Nvidia (NVDA), is scheduled to report results on Wednesday.

Expectations are high for the company, whose shares have risen 36% from a March low, while the Philadelphia SE Semiconductor Index has surged more than 60% this year on strong demand for AI-related chips.

Walmart (WMT), the largest retailer in the world, is also expected to report earnings this week, which could offer a clearer picture of how U.S. consumers are coping with higher energy prices and broader inflation pressures.

In other movers on the day, Dominion Energy (D) jumped 9.2% after power firm NextEra Energy (NEE) said it would buy the smaller utility in an all-stock deal valued at about $66.8 billion. NextEra's shares fell 5.8%.

Shares of Regeneron tumbled 10.2% as the drugmaker's experimental treatment missed the main goal in a late-stage trial in patients with advanced melanoma, a type of skin cancer.

Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE, and by a 1.18-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 59 new highs and 137 new lows. (Reporting by Ragini Mathur and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai and Maju Samuel)