US STOCKS-Nasdaq moves higher as tech stocks retrace some losses

* Tech-focused stocks rebound
* Banks stocks drop as U.S. bond yields fall from highs
* Indexes: Dow down 1.19%, S&P down 0.1%, Nasdaq adds 0.8%

(Updates to mid-afternoon, adds new comment, changes byline,
adds NEW YORK dateline)
By Gertrude Chavez-Dreyfuss
NEW YORK Feb 26 (Reuters) - The tech-heavy Nasdaq index
partly rebounded on Friday from its worst day in four months in
choppy trading, even as sentiment remained fragile, with fears
of a rise in inflation keeping U.S. bond yields near a one-year
high.
The S&P 500 was little changed to slightly lower on the day,
while the Dow index fell to a three-week low. The Dow still
posted gains of nearly 4% for the month, as investors bought
into cyclical companies set to benefit from an economic
reopening.
Shares of Apple Inc AAPL.O , Amazon.com Inc AMZN.O ,
Microsoft Corp MSFT.O and Alphabet Inc GOOGL.O edged up
between 0.8% and 2.0%, but were headed for their worst week in
months.
The benchmark 10-year U.S. Treasury yield US10YT=RR eased
to 1.452% after jumping to 1.614% on Thursday, roiling stock
markets. US/ Wall Street's fear gauge .VIX hovered at a
one-month high.
"I think interest rate pressures have abated...so we're
seeing a little bit of wind in the sails of some of these tech
companies which may have been oversold," said Sal Bruno, chief
investment officer at IndexIQ.
The major averages were knocked off their all-time highs
last week after a sharp rise in U.S. Treasury yields triggered a
selloff in some of the mega-cap technology stocks.
Tech stocks are particularly sensitive to rising yields
because their value rests heavily on future earnings, which are
discounted more deeply when interest rates go up.
Nasdaq was still up 1.4% for the month despite the recent
rout.
Financials .SPSY and energy shares .SPNY , the best
performing S&P sectors this month, slipped about 1.4% and 2.1%
on Friday. Technology stocks .SPLRCT rose 1% and semiconductor
stocks advanced .SOX about 2.3%. O/R
The S&P 500 value index .IVX dropped 0.8% while the growth
index .IGX rose 0.7% in a reversal of this month's trend.
In mid-afternoon trading, the Dow Jones Industrial Average
.DJI fell 373.7 points, or 1.19%, to 31,028.31, the S&P 500
.SPX lost 3.71 points, or 0.10%, to 3,825.63 and the Nasdaq
Composite .IXIC added 110.49 points, or 0.84%, to 13,229.92.
An early surge in the shares of GameStop Corp GME.N
fizzled and left the video game retailer's stock down 8% on
Friday, throwing water on a renewed rally this week that has
left analysts puzzled. On the economic front, latest data showed U.S. consumer
spending increased by the most in seven months in January but
price pressures remained muted.
Stimulus will be back in focus as the Democratic-controlled
U.S. House of Representatives aims to pass President Joe Biden's
$1.9 trillion coronavirus aid bill on Friday in what would be
the first major legislative victory of his presidency.
Salesforce.com Inc CRM.N dropped 5.5% as the online
software company forecast full-year profit below market
expectations. Declining issues outnumbered advancing ones on the NYSE by a
1.54-to-1 ratio; on Nasdaq, a 1.46-to-1 ratio favored decliners.
The S&P 500 posted 4 new 52-week highs and one new low; the
Nasdaq Composite recorded 42 new highs and 47 new lows.