NEW YORK (CNN/Money) - The Dow closed lower Wednesday on profit taking and weakness in Altria, but the Nasdaq managed to close near unchanged on some late-session technology buying. However, Thursday's likely to be a different story, judging by the after-hours reaction to Yahoo!'s earnings news.

After the close of trade, the Internet bellwether said it earned 8 cents per share in its second quarter, in line with First Call estimates and up from 3 cents a year earlier. However, Yahoo! (YHOO: up $0.19 to $35.29, Research, Estimates) stock lost $2.10 to $33.19, or just under 6 percent in active after-hours trade, setting up the tech-heavy Nasdaq for some selling at the open Thursday.

"This is the classic 'buy the rumor, sell the news' reaction," said Donald Selkin, director of research at Joseph Stevens. "The market is expecting the second-quarter earnings are going to meet or beat, so even though Yahoo! almost tripled its earnings, you're seeing some selling."

Yahoo!'s almost 116 percent stock rise since the start of the year also makes investors more likely to sell, despite the positive news.

Selkin said the techs would likely sell off early Thursday, barring any unforeseen bullish news in the early going, but that the Nasdaq was likely heading for a pullback in the last few days of the week anyway.

Techs and the Nasdaq performed better than the rest of the market during trade Wednesday and throughout the week. Selkin suggested that some of the consumer stocks that have been falling this week, like Johnson & Johnson (JNJ: down $0.56 to $51.92, Research, Estimates) and Procter & Gamble (PG: down $1.60 to $88.50, Research, Estimates), could benefit Thursday as investors rotate out of some big-cap techs.

Also after the close Wednesday, No. 2 biotech Genentech (DNA: up $0.89 to $77.38, Research, Estimates) reported quarterly results. The company said it earned 31 cents per share, a nickel better than expected and up from the 23 cents it earned a year earlier, due to strong sales of its cancer treatments. However, shares were little changed in after-hours trade.

Optimism that the second half of the year will bring a healthy recovery to the economy and corporate profits has fostered stock buying since the market bottomed March 11, but some analysts say that investors may not be willing to take stocks a lot higher unless corporations start justifying that optimism by not only meeting, but beating expectations and providing more solidly optimistic guidance.

"I think we can see the market continue to move up through the summer, but it's going to depend on the earnings and the economic news," said Timothy Ghriskey, president of Ghriskey Capital Partners. "We should begin to see some evidence of an economic pick-up in the July data, which will start to come out early August. Second-quarter earnings look to be favorable, judging by the estimates and the fact that there have been less negative pre-announcements than in recent quarters."

Thursday brings earnings from PepsiCo (PEP: down $0.57 to $44.55, Research, Estimates) and Juniper Networks (JNPR: up $0.02 to $14.87, Research, Estimates) among others. PepsiCo is forecast to have earned 58 cents per share when it reports results before the bell, up from 51 cents a year earlier. Juniper is expected to have earned 2 cents, up from breakeven results a year earlier, when it reports results after the close.

Thursday also brings the weekly initial jobless claims report, forecast to have fallen to 420,000 from 430,000 the previous week, according to a consensus of economists surveyed by Briefing.com. Reports on June import and export prices are also expected, but they are unlikely to move markets.

The Dow Jones industrial average (down 66.88 to 9156.21, Charts) managed to trim its losses, but still closed firmly in the red, losing about 0.7 percent. The Standard & Poor's 500 (down 5.63 to 1002.21, Charts) index closed about 0.6 percent lower, while the Nasdaq composite (up 1.00 to 1747.46, Charts) closed near unchanged, continuing the recent trend of late-session tech buying lifting the indexes off their worst levels.

Investors who were looking for an excuse to take profits after Tuesday's mild rally found one in Dow stock Altria, which closed 5.9 percent lower after a bearish Morgan Stanley note.

The note said that its Philip Morris USA unit is likely to get a negative appeals court ruling on the reduction of a $12 billion bond as part of a class action suit and that it is apt to suffer from weak international volume growth. In addition, the stock was pressured after a report in the Wall Street Journal that rivals R.J. Reynolds (RJR: down $1.03 to $37.10, Research, Estimates) and Brown & Williamson (BATS: Research, Estimates) have discussed a potential merger.

The second-quarter corporate earnings reporting season essentially began late Tuesday, when Alcoa became the first major company to deliver its results. The aluminum maker, always the first Dow component to offer up its bottom line, reported lower earnings from a year earlier that nonetheless topped estimates.

On Wednesday, Morgan Stanley downgraded Alcoa to "equal-weight" from "over-weight." It closed 1.3 percent lower. Procter & Gamble and Home Depot (HD: down $1.06 to $33.49, Research, Estimates) were a couple of the other big Dow decliners.

Investors also focused on news that Microsoft (MSFT: down $0.23 to $27.47, Research, Estimates) will discontinue its practice of issuing stock options to employees and will instead issue stocks, starting in September. The stock lost 0.8 percent.

Cisco Systems (CSCO: up $0.07 to $18.80, Research, Estimates) gave back half of its morning gains after the company said a Dutch daily newspaper misquoted its chief executive, John Chambers, as saying an information technology pick-up would take place in two to four months. What Chambers actually said was that companies would begin spending on information technology two to four months after their business improved.

The retraction knocked the wind out of some of the telecommunications and networking stocks that had risen on the reports.

However, semiconductors remained strong, partly in response to Intel (INTC: up $0.33 to $23.48, Research, Estimates), which gained 1.4 percent after brokerage house UBS Warburg reiterated its "buy" rating and raised its 12-month price target on the chip leader to $29 from $26.

Market breadth was mixed, with nine stocks falling for every eight that rose on the New York Stock Exchange and nine stocks gaining for every seven that fell on the Nasdaq. Volume on the NYSE reached 1.56 billion shares and some 2.08 billion shares changed hands on the Nasdaq.

Treasury prices rose, pushing the 10-year note yield down to 3.68 percent. The dollar fell versus the yen and was flat versus the euro.

NYMEX light sweet crude oil futures gained 66 cents to $30.88 a barrel. Gold fell 50 cents to $343.90 on the COMEX in New York.