NEW YORK (CNN/Money) - The Nasdaq composite tumbled Thursday, while the broader market closed little changed, as investors shrugged off strong earnings and opted to take profits amid worries about rising interest rates.

Futures pointed to a weak open Friday, despite upbeat earnings after the bell from companies such as IBM and Siebel Systems.

The Nasdaq composite (down 22.68 to 2002.17, Charts) lost 1.1 percent, the Dow Jones industrial average (up 19.51 to 10397.46, Charts) added 0.1 percent, and the Standard & Poor's 500 (up 0.67 to 1128.84, Charts) index closed a few points above unchanged.

"The market is very emotional right now, and that's determining the direction," said David Briggs, head of equity trading at Federated Investors. "The fundamentals are good, the earnings news is positive. but when you have a dramatic move in the bond market like we've seen recently, that causes everyone to freeze, and you see this kind of buyer's strike."

Stock markets this week have been pulled between cheering signs of an economic and corporate profits recovery, and worrying about potential interest rate hikes that such bullish conditions are bound to cause. That proved true Thursday as well, with investors seeing more signs of a rising rate environment in the morning's strong factory numbers.

Briggs says that at some point, it is realistic to worry that a rise in interest rates will choke off a recovery, but that such concerns are not in place now, and any worries about this kind of environment are premature. The fact that rates are rising is a good thing, as it shows that the labor market and broader economy are improving.

Technology and in particular, semiconductors, led the declines on the Nasdaq Thursday, even after the bevy of bullish chip results reported in the last 24 hours.

Gains in drugmakers protected the Dow from the same declines. Drug stocks and profits are expected to benefit from the surging economy and tend to thrive in a variety of interest rate environments.

After the close, the earnings parade continued.

In a good sign for the tech spending recovery, IBM (IBM: Research, Estimates) reported earnings that rose from a year earlier, in line with expectations, on revenue that also rose from a year ago and surpassed expectations. However, shares declined after the bell, with analysts speculating that some investors were looking for higher revenue from new services contracts than what the firm reported.

Business software maker Siebel Systems (SEBL: down $0.19 to $11.66, Research, Estimates) reported a profit of six cents a share, a penny more than expected and a nickel more than a year earlier. The company also issued a second-quarter forecast that was in line with estimates. Shares edged up after hours.

Sun Microsystems (SUNW: Research, Estimates) posted a large quarterly loss versus a profit a year earlier, that was steeper than what analysts were expecting, due to a big restructuring charge. Shares declined two percent after hours.

Friday's most potentially market-moving earnings report is Nokia (NOK: Research, Estimates). The company warned a week ago that earnings would miss expectations. Current estimates are for a profit of 22 cents per share, versus 19 cents a year earlier.

A number of economic reports are also due Friday, including reads on housing starts and building permits, industrial production and capacity utilization and the first read on consumer sentiment from the University of Michigan.

Texas Instruments (TXN: down $0.66 to $28.02, Research, Estimates) reported earnings and sales that rose sharply from a year earlier, and also boosted its outlook for the second quarter because of increased demand for its chips used in mobile phones and other electronic devices. Fellow chipmaker Advanced Micro Devices (AMD: down $0.90 to $16.22, Research, Estimates) reported earnings of 12 cents a share, reversing a year-earlier loss and soundly topping expectations. The company also issued an improved forecast for the second quarter. Both stocks, however, declined.

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Lam Research (LRCX: down $1.49 to $25.33, Research, Estimates) and Fairchild Semiconductor (FCS: down $1.76 to $23.60, Research, Estimates) also reported higher-than-forecast earnings and saw their shares decline.

The weakness in the sector dragged down chip leader Intel (INTC: down $0.71 to $26.66, Research, Estimates), which lost 2.6 percent and topped the Nasdaq's most-actives list.

The Philadelphia Semiconductor (down 14.36 to 488.76, Charts) index, or the Soxx, lost 2.8 percent.

But Apple Computer (AAPL: up $2.66 to $29.30, Research, Estimates), which also said improved demand for its products resulted in solid results that grew from a year earlier, saw its stock rewarded with a rise of 10 percent. The company also said second-quarter results would beat expectations.

Thursday morning, Citigroup (C: down $1.03 to $49.92, Research, Estimates) reported earnings of 98 cents per share, up from a year earlier and more than what analysts surveyed by First Call were expecting. However, Citi's stock declined and the broader financial sector remained weak, with investors continuing to sell the banks on interest rate concerns.

Market breadth was negative. On the New York Stock Exchange, where 1.56 billion shares traded, declining issues outnumbered advancers by a narrow margin. Losers topped gainers by more than three to two on the Nasdaq as 1.93 billion shares changed hands.

Treasury prices eroded as the day wore on. The 10-year note lost 7/32 of a point, its yield rising to 4.39 percent. The dollar gained against the euro and dipped versus the yen.

NYMEX light sweet crude oil futures rose 68 cents to settle at $37.10 a barrel. COMEX gold shed $2.20 to settle at $398.30 an ounce.

In international trading, European markets closed mixed, while Asian markets closed lower.