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US STOCKS-Dow, S&P 500 headed for tepid open as Fed meeting begins

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* Futures point to strong open for tech-related stocks

* Retail sales drop more than expected in Feb

* Industrial production data at 9:15 a.m. ET

* Futures: Dow down 0.08%, S&P up 0.06%, Nasdaq up 0.48% (Adds comment, details; updates prices)

March 16 (Reuters) - Futures pointed to a muted open for the S&P 500 and the Dow on Tuesday as investors remained on the sidelines ahead of the Federal Reserve’s two-day policy meeting against the backdrop of rising borrowing costs.

Nasdaq futures rose about 0.5% by 8:37 a.m. ET, pointing to an extension of a rebound in technology stocks that were at the heart of February’s selloff. The Nasdaq 100 is still about 5% below its Feb. 12 record closing high.

The Dow notched its sixth consecutive all-time high on Monday on optimism over a $1.9 trillion fiscal stimulus package and as several airlines indicated leisure travel was picking up, bolstering views that the economy was on a path to recovery.

Scores of stimulus, improving economic data and mass vaccinations have stoked inflation worries, pushing up yields and upending equity markets in February. Yields on the benchmark U.S. 10-year Treasury slipped for the second straight session on Tuesday to 1.59% from a 13-month high.

“Investors are holding back on trades ahead of the Fed meet while the focus continues to be on longer-end Treasuries as the market factors in the possibility of the 10-year yield hitting 2%,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

Fears about an overheating economy and a jump-forward in interest rate have increased scrutiny on the Fed meeting, where policymakers are likely to raise economic forecasts and repeat their pledge to remain accommodative for the foreseeable future.

Investors have slightly increased their cash allocation, deeming that inflation and ‘taper tantrums’ could topple the record rally in financial markets, BofA’s March fund manager survey showed on Tuesday.

Futures were little changed after data showed retail sales dropped more than expected in February due to bitterly cold weather across the country. Industrial production numbers for last month are also due before the opening bell.

Dow E-minis were down 27 points, or 0.08%, S&P 500 E-minis were up 2.5 points, or 0.06% and Nasdaq 100 E-minis were up 62.5 points, or 0.48%.

Mega-cap stocks including Facebook Inc, Apple Inc , Amazon.com Inc, Netflix Inc, Alphabet Inc and Microsoft rose between 0.4% and 1% in early trade.

Ford Motor Co dropped about 1.4% after announcing a $2 billion convertible debt deal. (Reporting by Medha Singh and Shashank Nayar in Bengaluru; Editing by Maju Samuel)

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