* U.S. stocks had their worst day in 3 weeks on Tuesday
* Dollar hits new 8-year high after brief retreat
* Michael Kors slumps on weak sales, weighs on rivals
* Tiffany gains as results beat estimates
* Indexes up: Dow 0.2 pct, S&P 0.3 pct, Nasdaq 0.4 pct (Updates to open)
By Tanya Agrawal
May 27 (Reuters) - U.S. stocks opened higher on Wednesday, a day after notching their steepest fall in three weeks as the dollar enjoyed its biggest rally in two years.
That rally was spurred by buoyant U.S. economic data on Tuesday, which fueled expectations that an interest rate hike could come sooner rather than later this year.
The strong dollar, which means that U.S. companies earn less when sales abroad are brought back, and concerns about Greece has weighed heavily on Wall Street.
“The market seems to be in a relief rally and looks like its catching its breath after yesterday’s selloff,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
“There will be a rate hike this year, but it won’t be an aggressive, meeting-to-meeting hike.”
Greece and its European creditors have played down fears that Athens would default on a payment to the International Monetary Fund next week.
After briefly falling back, the dollar soared to a fresh eight-year high against the yen on Wednesday.
At 9:46 a.m. ET (1346 GMT) the Dow Jones industrial average was up 44.77 points, or 0.25 percent, at 18,086.31, the S&P 500 was up 6.18 points, or 0.29 percent, at 2,110.38 and the Nasdaq Composite was up 20.15 points, or 0.4 percent, at 5,052.90.
Nine of the 10 major S&P 500 sectors were higher, with the health sector gaining the most at 0.62 percent.
Apple’s 0.9 percent gain to $130.74 gave the biggest boost to the S&P and the Nasdaq.
Tiffany’s shares were up 11.2 percent to $95.10 after the luxury jeweler’s quarterly profit beat estimates.
Michael Kors Holdings dropped as much as 18.7 percent to a more than two-year low of $49.23 after the handbag maker reported its slowest quarterly revenue growth since it went public in December 2011.
Michael Kors’ rivals Coach fell 4.6 percent, Kate Spade was off 2.2 percent and Fossil dropped 6 percent on Kors’ report of lower tourist traffic, weak watch demand and shipping delays due to West Coast port disruptions.
Workday fell 9.6 percent to $83.55 after the software maker for human resource services forecast current-quarter billings below market expectations and reported a bigger quarterly net loss.
GlobeImmune slumped 47.8 percent to $4.30 after its hepatitis B drug failed in a mid-stage trial.
Advancing issues outnumbered decliners on the NYSE by 1,526 to 1,181, for a 1.29-to-1 ratio on the upside. On the Nasdaq, 1,150 issues rose and 1,065 fell for a 1.08-to-1 ratio favoring advancers.
The S&P 500 index showed six new 52-week highs and three new lows while the Nasdaq recorded 22 new highs and 21 new lows. (Editing by Savio D‘Souza)