US STOCKS-Nasdaq slumps as bond yields surge

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* 10-year Treasury yields at highest since Jan 2020
* Weekly jobless claims rise unexpectedly in the latest week
* Indexes: Dow flat, S&P down 0.62%, Nasdaq drops 1.52%

(Updates to market open)
By Shashank Nayar and Medha Singh
March 18 (Reuters) - The S&P 500 eased from a record high on
Thursday while the tech-heavy Nasdaq shed more than 1% as bond
yields hit 14-month peak after the Federal Reserve pledged to
tolerate inflation and keep monetary policy loose through 2023.
The yield on the benchmark 10-year notes US10YT=RR crossed
1.75% for the first time since January 2020, pressuring
high-growth companies including Apple Inc AAPL.O , Facebook Inc
FB.O , Netflix Inc NFLX.O , Amazon.com Inc AMZN.O and
Microsoft Corp MSFT.O dropped between 1.2% and 1.6%.
Tech stocks are particularly sensitive to rising yields
because their value rests heavily on future earnings, which are
discounted more deeply when bond returns go up.
The blue-chip Dow hit another record high a day after the
Fed projected strongest growth in nearly 40 years as the
COVID-19 crisis winds down, and repeated its pledge to keep its
target interest rate near zero for years to come. Opinions among the Fed's 18 current policymakers did shift
somewhat, with four now expecting rates may need to rise next
year and seven seeing a rate increase in 2023.
"It's a slight increase in policymakers in thinking that
there might be a move sooner which is really feeding that bond
market rout and sending the yields higher," said Fiona Cincotta,
senior financial market analyst at Gain Capital in London.
While inflation is expected to exceed the Fed's 2.0% target
to 2.4% this year, Fed Chair Jerome Powell views it as a
temporary surge that will not change the central bank's stance.
A $1.9 trillion spending stimulus sparked fears of rising
inflation that triggered a jump in longer-end Treasury yields,
accelerating a rotation into value stocks at the cost of
high-growth tech stocks.
Economic data was mixed on Thursday with one showing the
number of American 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.
"If economic data is better than expected before those
stimulus checks hit the accounts and the reopening is fully in
force, the economy is going to get hotter from there," added
Cincotta.
At 10:04 a.m. ET, the Dow Jones Industrial Average .DJI
fell 12.72 points, or 0.04% , to 33,002.65, the S&P 500 .SPX
lost 24.55 points, or 0.62%, to 3,949.57 and the Nasdaq
Composite .IXIC lost 205.08 points, or 1.52%, to 13,320.12.
Bank stocks .SPXBK , sensitive to economic outlook, jumped
about 2.4% while sectors poised to benefit the most from a
reopening economy including financials .SPSY and industrials
.SPLRCI hovered near all-time highs.
In corporate news, Accenture ACN.N jumped about 5% 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 4.5% after the company
forecast annual same-store sales and profit below estimates,
indicating the pandemic-fueled rush for lower-priced groceries
was waning faster than expected. The so-called meme stock AMC Entertainment AMC.N rose 2.6%
after the movie theater operator said it would have 98% of its
U.S. locations open from Friday. Declining issues outnumbered advancers by 1.9-to-1 on the
NYSE and the Nasdaq.
The S&P 500 posted 44 new 52-week highs and no new lows,
while the Nasdaq recorded 118 new highs and 22 new lows.