NEW YORK (CNN/Money) - U.S. tech stocks led the markets to a lower close Thursday after an uninspiring earnings report from an Internet heavyweight and more profit warnings from the software sector.

The Dow Industrials (down 68.73 to 10,171.56, Charts) shed about 0.7 percent, the Nasdaq composite (down 30.76 to 1,935.32, Charts) dropped about 1.6 percent and the S&P 500 index (down 9.22 to 1,109.11, Charts) fell about 0.8 percent.

The markets were slightly lower for most of the trading day, but the declines accelerated towards the end of trading. Oil prices also contributed to the stock losses as crude rose more than a dollar to close above $40 a barrel on the New York Mercantile Exchange.

Late Wednesday Yahoo! and Alcoa kicked off the earnings season with lackluster reports, as Yahoo! failed to exceed estimates and Alcoa fell short.

Internet bellwether Yahoo! (YHOO: Research, Estimates) tumbled nearly 8 percent after the portal reported a profit that doubled from a year earlier, on revenue that jumped 90 percent, helped by strength in online advertising. The results, which merely met Wall Street's expectations, failed to impress investors after the stock's strong run over the past year.

Yahoo! wasn't the only factor hitting tech stocks Thursday.

Siebel Systems (SEBL: Research, Estimates) and BMC Software (BMC: Research, Estimates) shares each fell more than 13 percent as the companies joined peers Veritas (VRTS: Research, Estimates) and PeopleSoft (PSFT: Research, Estimates) in warning about lower-than-expected profits.

"These software warnings have got people thinking that companies aren't spending their wads of cash," said Phil Dow, equity strategy director at RBC Dain Rauscher. "There may have been some unrealistic expectations, so I'm waiting to see how the rest of the tech sector does."

Meanwhile, soft sales and a lukewarm forecast at Wal-Mart (WMT: Research, Estimates) pressured the Dow.

"Wal-Mart highlights an economic transition from relying on consumers to relying on the private sector and capital spending," said Richard Cripps, chief market strategist with Legg Mason. "So, we're looking more at companies like Caterpillar rather than Wal-Mart."

Alcoa (AA: down $0.22 to $32.55, Research, Estimates), whose second-quarter results were very strong but fell shy of estimates, saw its stock drift lower on the news.

Despite the slew of negative news Thursday, analysts still expect a solid stretch of earnings reports for the second quarter, said Gint Ramos, analyst with Thomson First Call, which tracks corporate earnings.

"This is kind of a rough spot, and we haven't seen earnings growth estimates impacted yet," he said. "Before these reports, the news from the second quarter had been pretty good."

Another Dow heavyweight will weigh in Friday as General Electric (GE: Research, Estimates), the world's largest company by market capitalization, reports its second-quarter results before the bell.

"GE has laid out a fairly consistent earnings picture and the key will be to see if its timeline remains intact," said Legg Mason's Cripps. "Any change from that will be news."

Market breadth was negative. On the New York Stock Exchange, where 1.3 billion shares traded, decliners beat advancers by seven to three. On the Nasdaq, losers outnumbered gainers by the same ratio as more than 1.7 billion shares traded.

On the economic front, the labor department reported that jobless claims fell by 39,000 to 310,000 last week. However, a seasonal adjustment may have skewed that figure.

The government is scheduled to release its reading on wholesale inventories Friday, with economists expecting a 0.5 percent increase.

The yield on the 10-year Treasury note inched down to 4.47 percent as its price rose 1/32 of a point. The dollar remained flat against other major currencies.

NYMEX light sweet crude oil futures rose $1.25 cents to $40.33 a barrel and COMEX gold gained $5.50 to $408.20 an ounce.

In international markets, stocks in Europe inched higher and Asian markets finished their session lower, while stocks in Australia rose.