US STOCKS-Wall Street closes down, tech selloff drags as bond yields climb

* U.S. 10-year Treasury yield rises above S&P 500 div yield

* Best Buy slips on downbeat annual sales forecast

* Weekly jobless claims decline (New throughout, updates prices, market activity and comments to close; new byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 25 (Reuters) - Wall Street's main indexes ended sharply lower on Thursday, with the Nasdaq index posting its largest daily percentage fall in four months, as technology-related stocks remained under pressure following a rise in U.S. bond yields.

The benchmark 10-year Treasury yields hit a one-year high of 1.614%, prompting investors concerned about rich valuations to lock in profits on some high-flying growth stocks.

The Treasury note yield rose above S&P 500 dividend yield, wiping out the stock market yield's strong advantage.

"Rates matter. At 1.5%, the yield is comparable to S&P 500 dividend yield," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "And there's no capital risk with a 10-year, you'll get your principal back. All of a sudden it's competitive with stocks,"

Apple Inc (AAPL), Amazon.com Inc (AMZN), Microsoft Corp (MSFT) , Alphabet Inc (GOOG), Facebook Inc (FB) and Netflix Inc (NFLX) all fell.

Despite the broad market slide, GameStop Corp (GME) shares soared again after doubling in the previous session, triggering a series of NYSE trading halts and leading a surprise resurgence of so-called "stonks" championed online by retail investors.

Unofficially, the Dow Jones Industrial Average fell 561.36 points, or 1.76%, to 31,400.5, the S&P 500 lost 96.12 points, or 2.45%, to 3,829.31 and the Nasdaq Composite dropped 478.54 points, or 3.52%, to 13,119.43.

The S&P 500 technology sector fell, as did communication services, among the sectors that powered the market's rally in 2020.

The S&P 500 growth index is nearly unchanged in February, sharply underperforming the value index, which has gained more than 7% on optimism related to a post-pandemic reopening of the economy.

"You've had an equity market that's hit record highs many times this year and it's expensive relative to historic norms," said Chase's Tuz. "We were primed for a sell-off."

Meanwhile, data showed fewer Americans filed new claims for unemployment benefits last week as COVID-19 infections fell, but the near-term outlook remained unclear after winter storms wreaked havoc in the South this month.

Optimism about more U.S. stimulus and a quicker pace of vaccinations at the beginning of the month have positioned the Dow Jones index for its best monthly gain since November.

However, the lack of significant new developments around the fiscal package and the winding down of the earnings season have caused uncertainty.

"In the beginning of February, the stimulus news was the driving force but now that it has been priced in, there is nothing on the distant horizon for equity investors to be excited about and there is a concern that upside is limited," said Mike Zigmont, head of trading and research at Harvest Volatility Management.

Tesla Inc (TSLA) fell after a media report that the electric-car maker told workers it would temporarily halt some production at its California assembly plant.

Moderna Inc (MRNA) jumped after the drugmaker said it was expecting $18.4 billion in sales from its COVID-19 vaccine this year. (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Stephen Culp)

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