NEW YORK (CNN/Money) - U.S. tech stocks fell Thursday, with concerns about corporate profits and company leadership weighing on the Nasdaq composite, while blue chips drifted on the Dow Jones industrial average, as the index struggled to keep rising after two sessions of gains.

With little news to provide upward momentum, stocks drifted ahead of a key report on the April labor market, due out Friday. Economists expect the unemployment rate to have risen, despite employers' continuing to add jobs.

"Tomorrow we've got a big labor number coming out and that may give someone a reason to get back in the market or to continue to get out," John Pickett, a specialist at LaBranche & Co., told CNNfn's Street Sweep.

The tech-laden Nasdaq composite index lost 32.71, or almost 2 percent, to 1,644.82.

Shares of Sun Microsystems (SUNW: down $0.52 to $6.45, Research, Estimates) continued to trade lower, after Wednesday's resignation of the No. 1 Unix server maker's president. And reports of a mixed performance of witnesses testifying at the Microsoft (MSFT: down $1.54 to $51.21, Research, Estimates) trial, along with continued concerns about WorldCom (WCOM: down $0.18 to $2.03, Research, Estimates) after its CEO's resignation, weakened those stocks as well.

"You're seeing some spillover weakness in Sun and the telecoms continue to waffle," said Michelle Clayman, chief investment officer at New Amsterdam Partners. "There's still uncertainty about tech leadership."

The Dow did close the day up 32.24 at 10,091.87, following a 240-point advance in the prior two sessions, but the blue-chip indicator couldn't find the momentum to advance with any show of strength. The Standard & Poor's 500 lost 1.90 to close at 1,084.56.

"Everybody is doing a 'wait and see' after the recent run," said Bill Roe, portfolio manager at Melhado Flynn & Associates. "In the last few months, every time we've stepped in too quickly, we've been subject to a correction shortly thereafter, so people are reluctant to commit."

The day's economic reports apparently offered little impetus to either bulls or bears as they await the jobs report, due before the markets open Friday.

The government said factory orders rose 0.4 percent in March, a better showing than the unchanged report economists were expecting.

The number of Americans filing new unemployment claims fell to 418,000 from a revised 428,000 the previous week, the government said. The number was higher than what economists were expecting and marked the fifth week in a row that claims remained above 400,000, a significant measure of sluggishness in the labor market.

"The unemployment claims declined a little, so that calmed some nerves," said Ned Riley, chief investment strategist at State Street Global Advisors. "But I think people are holding their breath a little for the labor report tomorrow (Friday)."

That report, according to a consensus of economists surveyed by Briefing.com, is expected to show a rise in the unemployment rate to 5.8 percent from March's 5.7 percent. The number of jobs created is forecast at 60,000, up from the 58,000 created in March; it would be the second straight month of increasing payrolls if the forecasts come through.

"The recovery is still tepid," State Street's Riley said. "The market is reflecting that slowness."

Shares of Dow component Hewlett-Packard (HWP: up $0.23 to $17.09, Research, Estimates) rose after brokerage house Sanford Bernstein upgraded shares of the computer maker to "outperform" from "market perform," saying the stock represents compelling long-term value and the combined HP-Compaq Computer (CPQ: up $0.11 to $10.76, Research, Estimates) should be able to deliver earnings per share of $1.20 in fiscal 2003. On Wednesday, an independent inspector certified the shareholder vote on the proposed $18 billion merger, which could be completed as early as Friday.

But on a down note, shares of copier maker Xerox (XRX: down $1.08 to $7.99, Research, Estimates) fell after Moody's cut its debt rating to a lower "junk" status.

Long-term tech investors got some encouraging news after an industry report showed global sales of semiconductors grew 7.2 percent in March from the previous month. While this implies that a bottom has probably been set after the sector's recent slide, it doesn't necessarily imply a strong recovery in sales is in the works -- results were down 25 percent from the same period a year earlier.

Market breadth was mixed. On the New York Stock Exchange, winners topped losers by more than 9-to-7 as 1.23 billion shares traded. On the Nasdaq, decliners edged advancers by 9-to-8 as 1.88 billion shares changed hands.

European markets closed lower, with the exception of London, which finished in the black, while Asian markets closed mainly higher.

Treasurys were lower, pushing the 10-year note yield to 5.11 percent.

The dollar was a little weaker versus the euro and a little stronger versus the yen. Light crude oil futures fell 51 cents to $26.24 a barrel. Gold declined to $308.60 an ounce.