* Indexes down: Dow 0.2%, S&P 500 0.3%, Nasdaq 0.3%

* Nvidia ( NVDA ) down after results underwhelm

* Walmart ( WMT ) falls after maintaining annual targets

* Quantum stocks jump on US investment in exchange for

stakes

* US manufacturing activity rises to four-year high in

May

(Updates to afternoon levels, adds analyst comments)

By Utkarsh Hathi and Ragini Mathur

May 21 (Reuters) - Wall Street's main indexes declined

on Thursday as resurgent oil prices reignited inflation fears

and pressured equities after a Reuters report signaled Tehran's

hardening stance in talks with Washington.

Brent crude futures reversed earlier losses and rose

2.6% to $107.75 a barrel. Oil had dipped earlier in the session

on hopes that diplomatic efforts could diffuse tensions, but

prices turned higher after Reuters reported Iran's Supreme

Leader Ayatollah Mojtaba Khamenei had issued a diktat that the

country's near-weapons-grade uranium not be shipped abroad.

The report diminished expectations for progress in U.S.-Iran

talks and revived concerns about a prolonged disruption around

the Strait of Hormuz, a critical route for global oil supplies.

The yield on the benchmark 10-year U.S. Treasury note rose

to 4.615%, resuming its recent climb after it snapped a

three-day winning streak on Wednesday. Investors worried a lack

of meaningful progress toward reopening the Strait could keep

oil prices elevated, adding to inflationary pressures and

weighing on equities.

"The market had briefly stabilized yesterday because

investors believed the White House may have been making progress

toward a truce with Iran. But that optimism faded, and as a

result, oil prices and Treasury yields began moving higher

again," said Art Hogan, chief market strategist at B Riley

Wealth.

Investors also focused on a fresh batch of corporate

earnings. Walmart ( WMT ) tumbled 7.9% after the largest global

retailer maintained its annual targets and forecast

second-quarter profit below estimates.

The S&P 500 consumer staples sector led losses

with a 2% drop, weighed by Walmart's ( WMT ) fall.

Shares of Nvidia ( NVDA ), the world's most valuable

company, edged down 1.5% as the AI heavyweight's upbeat

second-quarter revenue forecast and $80 billion share repurchase

program failed to impress investors.

Its stock has jumped about 18% so far this year but the pace

of growth has slowed as investors believe Nvidia ( NVDA ) will face

tougher competition, not only from Big Tech but also chip rivals

including Intel ( INTC ) and Advanced Micro Devices ( AMD ).

At 11:54 a.m. ET, the Dow Jones Industrial Average

fell 85.05 points, or 0.17%, to 49,924.30, the S&P 500

dropped 19.06 points, or 0.26%, to 7,413.91, and the Nasdaq

Composite lost 88.03 points, or 0.33%, to 26,182.33.

In economic data, jobless claims fell last week, pointing to

continued labor market resilience, giving the U.S. Federal

Reserve room to keep its focus on inflation risks.

U.S. manufacturing activity rose to a four-year high in May

as businesses built inventories to guard against potential

shortages and rising prices tied to the Iran war.

Among other movers, IBM ( IBM ) rose 8.1% on the news the

Trump administration will fund a handful of quantum computing

companies, including a new IBM ( IBM ) venture, in exchange for stakes

in some of the firms.

GlobalFoundries ( GFS ) climbed 10%, D-Wave Quantum ( QBTS )

jumped 24%, Rigetti Computing ( RGTI ) gained 24.4% and

Infleqtion ( INFQ ) surged 31.3%.

Intuit's shares plunged 20.1% after the software

maker lowered the annual revenue forecast for its tax-filing

software, TurboTax, and said it would cut 17% of its full-time

workforce.

Declining issues outnumbered advancers by a 2.16-to-1 ratio

on the NYSE and by a 1.41-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and four new

lows, while the Nasdaq Composite recorded 58 new highs and 90

new lows.