* Indexes down: Dow 0.1%, S&P 500 0.3%, Nasdaq 0.5%

* Nvidia ( NVDA ) down after results fail to uplift investors

* 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 for market open)

By Ragini Mathur and Utkarsh Hathi

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

Thursday as oil prices surged following a Reuters report that

Iran's Supreme ‌Leader Ayatollah Mojtaba Khamenei ordered the

country's near-weapons-grade uranium not to be sent abroad,

dimming hopes for progress in talks between Washington and

Tehran.

Brent crude futures jumped 2.2% to $107.32 a barrel.

Oil had extended declines earlier in the session on optimism

that diplomatic efforts could ease tensions. But the Reuters

report later suggested Iran was hardening its position on one of

Washington's key demands, reviving concerns about a prolonged

disruption around the Strait of Hormuz, a critical route for

global oil supplies.

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

to 4.609%, resuming its recent climb after snapping a three-day

run of gains on Wednesday. A lack of meaningful progress towards

reopening the strait has added to inflation concerns, pushing up

yields and weighing on equities.

Investors also parsed a fresh batch of corporate earnings.

Walmart ( WMT ) tumbled 7.5% after the largest retailer globally

maintained annual targets and forecast second-quarter profit

below estimates against a strained U.S. economic backdrop.

"The guidance (from Walmart ( WMT )) is what has caused investors to

be concerned that finally we are seeing the effects of high oil

prices and inflation on retail expectations. So that's what's

putting some pressure on stocks today," said Sam Stovall, chief

investment strategist, CFRA Research.

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

company, edged down 0.6% as the AI heavyweight's upbeat

second-quarter revenue forecast and an $80 billion share

repurchase program left investors unimpressed.

Its stock has jumped almost 20% 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 9:58 a.m. ET, the Dow Jones Industrial Average

fell 24.51 points, or 0.05%, to 49,987.34, the S&P 500

lost 22.83 points, or 0.30%, to 7,410.68 and the Nasdaq

Composite lost 119.67 points, or 0.46%, to 26,150.69.

Seven of the 11 main S&P 500 sectors were in negative

territory, with the consumer staples leading losses

with a 2.3% drop.

Investors also monitored SpaceX after the company unveiled

its IPO filing on Wednesday, giving the market its first glimpse

into how much billionaire Elon Musk is spending on AI as he bets

on transforming the rocket maker into a broader AI-led business.

On the economic front, the number of Americans filing new

applications for unemployment benefits fell last week, pointing

to continued labor-market resilience and giving the Federal

Reserve room to keep its focus on inflation risks.

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

as businesses boosted inventories to guard against potential

shortages and rising prices related to the war with Iran.

Among other movers, IBM ( IBM ) rose 5.6% as the Trump

administration will fund a handful of quantum-computing

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

in some of them.

GlobalFoundries ( GFS ) climbed 13%, D-Wave Quantum ( QBTS )

jumped 24.8%, Rigetti Computing ( RGTI ) gained 24.4% and

Infleqtion ( INFQ ) surged 39.8%.

Intuit shares plunged 20.5% 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 2.35-to-1 ratio

on the NYSE, and by a 1.7-to-1 ratio on the Nasdaq.

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

lows, while the Nasdaq Composite recorded 34 new

highs and 70 new lows.