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* Chip stocks slide after Swiss supplier flags falling demand
* Eight S&P sectors lower, with tech down more than 2 pct
* U.S. producer prices rise in line with est. in Sept
* Treasury yields climb on producer prices data
* Indexes down: Dow 0.90 pct, S&P 1.04 pct, Nasdaq 1.94 pct (Updates to open)
By Shreyashi Sanyal
Oct 10 (Reuters) - U.S. stock indexes dived around 1 percent on Wednesday as worries over China and the impact of rising Treasury yields on global growth drove falls in luxury goods companies and chipmakers.
Technology stocks slid more than 2 percent, the most among the 11 major S&P sectors, with the Philadelphia Semiconductor index down 3 percent after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening.
Intel fell 2.6 percent and Nvidia 4.4 percent. Chip gear producers Applied Materials, Teradyne and ASML Holdings fell between 3.5 percent and 4.6 percent.
Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China.
That all played into a market that is increasingly worried about global growth after warnings from the IMF this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally.
U.S. Treasury yields held near multi-year highs after producer prices climbed 0.2 percent in September, feeding into the pressure on the Federal Reserve to continue to raise interest rates even as the global economy struggles with headwinds from President Trump's trade war with China.
"The direct concern is higher interest rates," said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"People fear building prices into the system, both from China trade problems, other tariffs the U.S. has put into place, wage pressure, and today there is a little bit of concern about what the Hurricane in Florida could do to energy prices."
At 9:59 a.m. ET the Dow Jones Industrial Average was down 202.46 points, or 0.77 percent, at 26,228.11, the S&P 500 was down 27.02 points, or 0.94 percent, at 2,853.32 and the Nasdaq Composite was down 129.45 points, or 1.67 percent, at 7,608.57.
Eight of the 11 sectors were lower, with only the defensive utilities, real estate and consumer staples sectors higher.
Heavyweights Apple shed 1.6 percent and Amazon.com fell 2.5 percent. A Republican senator has asked the two companies for a staff briefing about a Bloomberg report that the Chinese government implanted malicious hardware into server motherboards provided by Super Micro Computer Inc.
Alibaba dropped 4.1 percent after Morgan Stanley and Raymond James cut their near-term profit estimates on the Chinese e-commerce company, citing a softer economic environment in China.
Sears Holdings plunged 32 percent after the Wall Street Journal said the debt-laden retailer was preparing for a possible bankruptcy.
Declining issues outnumbered advancers for a 2.77-to-1 ratio on the NYSE and a 2.07-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and 28 new lows, while the Nasdaq recorded six new highs and 90 new lows. (Reporting by Shreyashi Sanyal in Bengaluru)