US STOCKS-S&P 500, Nasdaq set for lower open as Fed takes center stage

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* Benchmark 10-year yields hit fresh 13-month peak
* McDonald's rises as DB raises rating, price target
* Futures: Dow up 0.09%, S&P 0.34%, Nasdaq off 1.13%

(Adds details, comment; Updates prices)
By Shashank Nayar and Medha Singh
March 17 (Reuters) - The S&P 500 and the Nasdaq were set to
drop at the open on Wednesday as U.S. bond yields spiked ahead
of the Federal Reserve's policy statement which could provide
hints on whether the central bank would raise interest rates
sooner than expected.
The benchmark 10-year yield US10YT=RR ticked up to a new
13-month high of 1.671%, denting demand for some high-growth
technology stocks and pressuring futures tied to the tech-heavy
Nasdaq 100 by about 1%. US/
Fears that massive stimulus would overheat economy has
triggered a rapid spike in long-duration Treasury yields,
derailing Wall Street's main indexes from their peaks last
month.
The Fed is expected to issue a blowout GDP forecast for 2021
at the end of a two-day meeting on Wednesday at 2 p.m. ET (1800
GMT). It will be followed by Fed Chair Jerome Powell's news
conference shortly after, where he is likely to reassure the
economy can take off without generating excessive
inflation. While the Fed has reiterated it will remain dovish till the
labor market fully recovers, some policymakers could hint at an
increase in rates in 2023. Some investors and economists are
betting on even earlier rate hikes, with Morgan Stanley
predicting a tightening of monetary policy early next year.
"I don't think the Fed is going to change their stance but
even if they are too strong about the economy, it could spook
markets so it's a very fine line," said Eric Diton, president
and managing director of the Wealth Alliance in New York.
The S&P 500 and the Dow started off the week at all-time
closing highs while the Nasdaq has recovered more than half of
its losses since confirming a correction last week on optimism
over the latest round of fiscal stimulus and vaccinations.
At 8:29 a.m. ET, Dow E-minis 1YMcv1 were up 30 points, or
0.09%, S&P 500 E-minis EScv1 were down 13 points, or 0.34% and
Nasdaq 100 E-minis NQcv1 were down 148.25 points, or 1.13%.
Apple Inc AAPL.O , Facebook Inc FB.O , Netflix Inc
NFLX.O and Microsoft Corp MSFT.O slipped between 0.2% and
0.6% in premarket trading in a continuation of a rotation out of
high-flying companies into last year's laggards including
financials, industrials and materials.
"The play is value ... as the economy picks up, there is a
lot more leverage in earnings growth for cyclical companies,"
Diton added.
Fast-food retailer McDonald's MCD.N gained nearly 1% after
Deutsche Bank raised its target price on the stock and also
upgraded its recommendation to "buy" from "hold".