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GLOBAL MARKETS-U.S. yields scale new heights, tech drop weighs on Wall St

* 10-yr U.S. yield tops 1.75% as investors digest Fed

* S&P 500 drops, tech-heavy Nasdaq slumps

* MSCI global index little changed as Europe’s STOXX gains

* Dollar recovers from post-Fed drop, oil tumbles (Updates with afternoon U.S. trading)

NEW YORK/LONDON, March 18 (Reuters) - Benchmark U.S. Treasury yields hit 14-month peaks on Thursday, putting fresh pressure on technology stocks, as markets reversed some moves from their initial reactions to the Federal Reserve’s policy statement a day earlier.

The benchmark S&P 500 fell from record highs and the tech-heavy Nasdaq slumped more than 1%. MSCI’s gauge of stocks across the globe gained 0.02%, though supported by European shares as the pan-European STOXX 600 index rose 0.40%.

The dollar rallied, helping drive a sharp drop in oil prices and reversing an initial fall following the U.S. central bank’s meeting on Wednesday, when the Fed said the U.S. economy is heading for its strongest growth in nearly 40 years as it recovers from the COVID-19 crisis.

Investors said markets were continuing to react to the Fed’s meeting and Chairman Jerome Powell’s press conference, as the central bank pledged to keep its foot on the gas despite an expected surge of inflation.

“It’s all about the Federal Reserve meeting driving the markets today,” said Brad Peterson, regional portfolio adviser at Northern Trust Wealth Management.

“While they reassured people that they aren’t going to be in any hurry to raise short rates, their comfort with the back-up in rates at the long end of the curve is a bit surprising to people.”

On Wall Street, the Dow Jones Industrial Average rose 169.85 points, or 0.51%, to 33,185.22, the S&P 500 lost 12.7 points, or 0.32%, to 3,961.42 and the Nasdaq Composite dropped 189.72 points, or 1.4%, to 13,335.49.

The S&P 500 tech sector slumped more than 1% while financials, which are sensitive to bond yields, were the best-performing group.

The yield on the 10-year U.S. Treasury note rose as high as 1.754%, its highest level since January 2020, leading a worldwide move higher in bond yields.

Benchmark 10-year notes last fell 25/32 in price to yield 1.7295%, from 1.641% late on Wednesday.

“The Fed has given a little bit of a green light to higher rates and the reason is pricing to reality, pricing to this stronger economic environment,” said Tony Rodriguez, head of fixed income strategy at Nuveen.

Data showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the labor market is regaining its footing as an acceleration in the pace of vaccinations leads to more businesses reopening.

The U.S. dollar rallied across the board, as higher Treasury yields helped it recoup losses from the previous session.

The dollar index rose 0.414%, with the euro down 0.41% to $1.1929.

Oil prices fell for a fifth day on a stronger dollar, a further increase in U.S. crude and fuel inventories and the weight of the ever-present COVID-19 pandemic.

U.S. crude recently fell 5.48% to $61.06 per barrel and Brent was at $64.48, down 5.18% on the day.

Additional reporting by Karen Pierog in Chicago, Ritvik Carvalho in London; editing by Larry King, Jonathan Oatis and Dan Grebler

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