US STOCKS-S&P 500, Nasdaq fall as chip stocks slide, Treasury yields climb

(Updates prices to late afternoon trading)

* Indexes off: Dow 0.01%, S&P 500 off 0.43%, Nasdaq down 0.89%

* Dominion Energy (D) rises on NextEra deal

* Regeneron slides after skin cancer drug combo misses trial goal

By Sin?ad Carew and Ragini Mathur

May 18 (Reuters) - Wall Street's main stock indexes were lower on Monday, with the technology-heavy Nasdaq leading declines as investors booked profits while surging Treasury yields and oil prices fueled concerns that inflation and borrowing costs could stay elevated.

The 10-year Treasury yield, the benchmark for global borrowing costs, was 4.63%, having climbed to its highest level since February 2025 earlier in the session. The bond-market selloff was fueled by spiking oil prices, which have stoked concerns of inflation potentially keeping borrowing costs elevated as efforts to end the Iran war appeared to stall. U.S. crude was up nearly 1%. Prices had dipped 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.

RALLY PAUSE

The S&P 500 and the Nasdaq were on track for their second straight day of declines as investors took a break from a rally that started in late March. The S&P closed Thursday's session up more than 18% from its March 30 post-war closing low, while the Nasdaq gained 28% as enthusiasm about artificial intelligence and solid technology earnings helped investors look past inflationary threats.

"There's concern about the rally we've had in a short period of time, and there's some profit taking," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

While he pointed to rising oil prices and Treasury yields as contributing factors for Monday's selling, Ghriskey said these issues were not new and he did not see a fundamental reason for the rally or the profit taking: "A lot of investors are lemmings. They see the weakness and pile on."

At 2:09 p.m. ET (1809 GMT), the Dow Jones Industrial Average fell 6.32 points, or 0.01%, to 49,519.85. The S&P 500 declined 32.03 points, or 0.43%, to 7,376.47 and the Nasdaq Composite sank 233.78 points, or 0.89%, to 25,991.37.

The heavyweight information technology sector fell 1.9% and led declines among the S&P 500's 11 major industry sectors. Chip stocks were among the biggest drags with the Philadelphia SE Semiconductor Index down 3.8%. Energy was the biggest sector gainer, up 1.8%.

Traders are 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.

NVIDIA RESULTS IN FOCUS

The world's most valuable company, Nvidia (NVDA), is scheduled to report results on Wednesday. The chipmaker was the S&P 500's biggest index-point drag on Monday, down 2.2%.

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 world's largest retailer, is also expected to report earnings this week, which could offer a clearer picture of how U.S. consumers are coping with high energy prices and broader inflation.

Leading the S&P 500 were shares of software company ServiceNow (NOW), which were up 9.6%. BofA Global Research reinstated coverage of the company with a "buy" rating and set a price objective that implied an almost 37% increase from its last close.

Dominion Energy (D) jumped 8% after power firm NextEra Energy (NEE) said it would buy the utility in an all-stock deal valued at about $66.8 billion. NextEra's shares fell nearly 7%. Shares of Regeneron tumbled almost 10% 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 1.1-to-1 ratio on the NYSE, where there were 144 new highs and 116 new lows. On the Nasdaq, 2,124 stocks rose and 2,608 fell as declining issues outnumbered advancers by a 1.23-to-1 ratio. The S&P 500 posted 20 new 52-week highs and 13 new lows. (Reporting by Sin?ad Carew in New York, Ragini Mathur and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai, Maju Samuel, Rod Nickel)