US STOCKS-Nasdaq set to slump at open as bond yields spike

(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 at highest since Jan 2020

* Weekly jobless claims rise unexpectedly in the latest week

* Futures: Dow flat, S&P down 0.65%, Nasdaq drops 1.63% (Adds comment, details; updates prices)

March 18 (Reuters) - The Nasdaq was set to drop sharply at the open on Thursday as bond yields hit 14-month highs after the Federal Reserve pledged to tolerate inflation and keep monetary policy loose through 2023.

Yield-sensitive tech stocks such as Apple Inc, Facebook Inc, Netflix Inc, Inc and Microsoft Corp dropped between 1.2% and 1.6% in premarket trading.

The yield on the benchmark 10-year notes crossed 1.75% on Thursday, for the first time since Janurary 2020, dragging futures tied to tech-heavy Nasdaq 100 index down 1.5%.

The Dow on Wednesday surpassed 33,000 points for the first time 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.

“Although the Fed is saying they will remain accommodative, the point that the markets are grabbing on to is that there are more policymakers seeing a move in rates,” 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, leading to a rotation into value stocks at the cost of high-growth tech stocks.

Futures were little changed after data indicated the number of American filing for jobless benefits unexpectedly rose last week. A separate report showed 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 8:40 a.m. ET, Dow E-minis were down 5 points, or 0.02%, S&P 500 E-minis were down 25.75 points, or 0.65% and Nasdaq 100 E-minis were down 215.75 points, or 1.63%.

Big U.S. banks that are sensitive to economic outlook including JPMorgan Chase & Co, Bank of America Corp , Citigroup Inc and Goldman Sachs, outperformed in premarket trade.

In corporate news, Accenture 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 dropped 4.7% 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 rose 2.6% after the movie theater operator said it would have 98% of its U.S. locations open from Friday. (Reporting by Shashank Nayar in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)