US STOCKS-Wall St slips as inflation fears push yields higher

* Indexes down: Dow 0.5%, S&P 500 0.6%, Nasdaq 0.8%

* Akamai Technologies (AKAM) down after announcing senior notes offering

* Software stocks among top gainers (Updates to market open)

By Ragini Mathur and Utkarsh Hathi

May 19 (Reuters) - Wall Street's main indexes fell on Tuesday, pressured by consumer discretionary stocks and renewed inflation worries as the 10-year Treasury yield climbed to its highest level in more than a year.

An equities rally lost steam on Friday after a selloff in global bond markets evoked fears of major central banks tightening monetary policy, with the Middle East conflict pushing oil prices higher and stoking inflation concerns.

Brent crude futures dipped 1.6%, but were still above $110 after U.S. President Donald Trump said on social media on Monday that he had held off on a planned military strike against Iran, scheduled for Tuesday, while negotiations continued.

The benchmark 10-year Treasury yield continued to surge, hitting its highest level since January 2025 at 4.663%.

"We are still in the same macroeconomic setup that is unideal for equities," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"The better-than-expected earnings and the earnings estimates have been digested so far and already priced in. The market is going back to pricing macroeconomic and geopolitical risks - and that is weighing on the technology stocks that have rallied so far."

At 10:02 a.m. ET, the Dow Jones Industrial Average fell 239.85 points, or 0.48%, to 49,446.27, the S&P 500 dropped 43.50 points, or 0.59%, to 7,359.55, and the Nasdaq Composite lost 217.87 points, or 0.83%, to 25,872.86.

Seven of the 11 main S&P 500 sectors were in the red, with the materials sector leading declines, falling 2.3%.

Losses in consumer discretionary weighed the most on the benchmark S&P 500.

The S&P 500 and tech-heavy Nasdaq had also closed lower on Monday, as rising yields pressured technology and other growth stocks. Higher yields typically hurt such companies because their valuations depend heavily on future profit expectations.

Technology shares, however, dipped on Tuesday, supported by gains in software stocks that extended their recent upward momentum, ranking among the session's strongest performers.

Workday rose 5.1%, Atlassian (TEAM) gained 3.3%, Intuit advanced 4.1%, and Zscaler (ZS) and ServiceNow (NOW) added 3.9% and 5.8%, respectively.

The software index jumped 1.8%, building on a roughly 5% gain over the previous three sessions.

Cloud firm Akamai Technologies (AKAM) fell 3.9% after announcing a $2.6 billion convertible bond offering.

On Wednesday, investors will focus on minutes from the U.S. Federal Reserve's latest policy meeting for clues on how much support there was among policymakers to pivot to a neutral stance from an easing bias.

Markets are pricing in more than a 40% chance the central bank will raise interest rates by at least 25 basis points in January, according to CME's FedWatch tool.

Nvidia's (NVDA) earnings, also due Wednesday, are a major test for markets. The world's most valuable company will be closely watched for evidence AI-driven demand is strong enough to justify elevated valuations across semiconductors.

Declining issues outnumbered advancers by a 2.89-to-1 ratio on the NYSE and by a 2.31-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and 20 new lows, while the Nasdaq Composite recorded 19 new highs and 106 new lows. (Reporting by Ragini Mathur and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai)