CORRECTED-US STOCKS-Wall Street drops as high-flying tech stocks retreat

(Corrects bullet point to show S&P 500 energy index did not hit
record high)
* U.S. private payrolls rise less than expected in Feb
* Financial, industrial indexes hit intra-day records

By Noel Randewich
March 3 (Reuters) - The Nasdaq ended sharply lower on
Wednesday after investors sold high-flying technology shares and
pivoted to sectors viewed as more likely to benefit from an
economic recovery on the back of fiscal stimulus and vaccination
programs.
Microsoft Corp MSFT.O , Apple Inc AAPL.O and Amazon.com
Inc AMZN.O dropped, weighing more than any other stocks on the
S&P 500.
The S&P 500 financial .SPSY and industrial .SPLRCI
sector indexes reached intra-day record highs. Most other S&P
500 sectors declined.
The Russell 1000 value index .RLV , which leans heavily on
economy-linked sectors, edged up, while its growth index .RLG ,
comprising large tech companies, lost ground.
"Today is the perfect encapsulation of the big theme we've
been seeing in the past couple of months: The vaccine rollout is
going well and the economy improving, and that is sending yields
and rate expectations higher, which is hurting growth stocks,"
said Baird investment strategist Ross Mayfield, in Louisville,
Kentucky.
Unofficially, the Dow Jones Industrial Average .DJI fell
119.08 points, or 0.38%, to 31,272.44, the S&P 500 .SPX lost
50.46 points, or 1.30%, to 3,819.83 and the Nasdaq Composite
.IXIC dropped 361.04 points, or 2.7%, to 12,997.75.
The U.S. economic recovery continued at a modest pace over
the first weeks of this year, with businesses optimistic about
the months to come and demand for housing "robust," but only
slow improvement in the job market, the Federal Reserve
reported.
While the vaccine distribution is expected to help the
economy, data showed U.S. private employers hired fewer workers
than expected in February, suggesting the labor market was
struggling to regain speed. Another report showed U.S. services industry activity
unexpectedly slowed in February amid winter storms, while a
measure of prices paid by companies for inputs surged to the
highest level in nearly 12-1/2 years. The U.S. 10-year Treasury yield US10YT=RR ticked up to
1.47%, pressuring areas of the market with high valuations. It
was still off last week's peak of above 1.61% that roiled stock
markets as investors bet on rising inflation.
Rising interest rates disproportionately hurt high-growth
tech companies because investors value them based on earnings
expected years into the future, and high interest rates hurt the
value of future earnings more than the value of earnings made in
the short term.
"There is a definite headwind for equity markets if yields
go above the 1.5% level with most investors keeping an eye on
the pace of yield growth," said Michael Stritch, chief
investment officer at BMO Wealth Management.
President Joe Biden's proposed $1.9 trillion coronavirus
relief bill would phase out $1,400 payments to high-income
Americans in a compromise with moderate Democratic senators,
according to lawmakers and media reports. Exxon Mobil Corp XOM.N rose after the oil major unveiled
plans to grow dividends and curb spending with projections that
were less bold than previous years.