US STOCKS-Nasdaq slumps as bond yield surge hurts tech valuations

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window.)
* 10-year Treasury yields reach highest level since Jan 2020
* Weekly jobless claims rise unexpectedly in the latest week
* Value stocks outperform growth names
* Indexes: Dow +0.49%, S&P 500 -0.37%, Nasdaq -1.46%

(Updates with afternoon trading)
By Noel Randewich
March 18 (Reuters) - The S&P 500 receded from a record high
on Thursday while the Nasdaq shed more than 1% as a spike in
U.S. bond yields accelerated a move out of growth stocks and
into companies viewed as likely to outperform as the economy
recovers.
The Russell 1000 value index .RLV , which is heavily
comprised of cyclical stocks such as financials and energy,
added about 0.2% while the Russell 1000 growth index .RLG ,
which includes technology stocks, dropped about 1.4%.
That rotation helped lift the Dow Jones Industrial Average
to an intraday record high, led by UnitedHealth Group UNH.N
and Goldman Sachs Group GS.N , both up more than 2%.
The yield on the benchmark 10-year Treasuries US10YT=RR
crossed 1.75% to hit a 14-month high a day after the Fed
projected the strongest growth in nearly 40 years as the
COVID-19 crisis winds down, and also repeated its pledge to keep
its target interest rate near zero for years to come.

"The Fed just saying they are not going to raise rates until
2023 really means nothing," said Tim Ghriskey, chief investment
strategist at Inverness Counsel in New York. "The Fed is on the
sidelines, but if bond yields keep going up, that is what really
hurts the economy."
Apple Inc AAPL.O and Amazon.com Inc AMZN.O dropped more
than 2%. Tech and other growth stocks are particularly sensitive
to rising yields because their value rests heavily on earnings
far into the future, which are discounted more deeply when bond
yields rise.
A recent $1.9 trillion spending stimulus sparked fears of
rising inflation and contributed to the jump in longer-end
Treasury yields.
Underscoring the staggered recovery in the labor market,
data showed the number of Americans filing for jobless benefits
unexpectedly rose last week. A separate report indicated the Philly Fed business index
jumped more than expected, to its highest level since 1973.
In midafternoon trading on Thursday, the Dow Jones
Industrial Average .DJI was up 0.49% at 33,176.67 points,
while the S&P 500 .SPX lost 0.37% to 3,959.43.
The Nasdaq Composite .IXIC dropped 1.46% to 13,328.11.
The S&P 500 financial sector index .SPSY , sensitive to the
economic outlook, rose almost 2%, while the industrial index
.SPLRCI climbed almost 1%. The technology index .SPLRCT fell
2.3%.
Accenture ACN.N jumped about 1.9% after the IT consulting
firm raised its full-year revenue forecast and reported
second-quarter revenue above analysts' estimates, as more
businesses used its digital services to shift operations to the
cloud. Dollar General Corp DG.N dropped more than 5% after the
retailer forecast annual same-store sales and profit below
estimates, indicating that a pandemic-fueled rush for
lower-priced goods may be waning faster than expected.
AMC Entertainment AMC.N jumped almost 5% after the movie
theater operator said it would have 98% of its U.S. locations
open from Friday. Declining issues outnumbered advancing ones on the NYSE by a
1.69-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favored decliners.
The S&P 500 posted 84 new 52-week highs and no new lows; the
Nasdaq Composite recorded 208 new highs and 20 new lows.