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NEW YORK (CNN/Money) -
Stocks slumped Thursday as investors cashed out of technology and other leaders of the recent rally amid rising oil prices and jitters about Friday's key employment report.
Nasdaq and S&P futures point to a mixed open Friday, when fair value is taken into account.
The Nasdaq composite (down 25.49 to 2,191.32, Charts) lost nearly 1.2 percent.
The Dow Jones industrial average (down 87.49 to 10,610.10, Charts) and the Standard & Poor's 500 (down 9.18 to 1,235.86, Charts) index both saw slightly smaller declines.
A big rally Tuesday had set the Nasdaq and S&P 500 at four-year highs, and stocks have been struggling since then.
"We've been going up for weeks, responding to good economic data and great earnings," said Art Hogan, chief market analyst at Jefferies & Co.
"This is a long overdue pause after a solid rally, and not something more," he added.
Thursday's sell-off happened amid higher oil prices, ho-hum July sales from retailers and some jitters about Friday's big jobs report.
"People are sort of reassessing interest rates ahead of next week's Fed meeting as well," said Maria Fiorini Ramirez, president of money manager Maria Fiorini Ramirez Inc. "Tomorrow, they'll be looking to see what the jobs report says about the strength of the economy."
Due early Friday, the report is expected to show that employers added around 180,000 to their payrolls in July after adding 146,000 the previous month, according to a consensus of economists surveyed by Briefing.com. The unemployment rate is expected to hold steady at 5 percent.
"If the payrolls number is anywhere near in line with estimates, we're not going to see much of a stock reaction," Hogan added.
After the close Thursday, Pixar Animation Studios (Research) reported lower second-quarter earnings that were nonetheless in line with estimates. Shares inched higher.
Techs lead sell-off
The influential semiconductor sector was weaker across the board. All 19 components of the Philadelphia Semiconductor (down 11.75 to 472.54, Charts) index, or the SOX, fell. The Sox lost 2.4 percent.
A variety of other influential big technology issues fell, including Dell (down $0.70 to $39.83, Research), Apple Computer (down $0.51 to $42.71, Research) and eBay (down $0.72 to $43.83, Research).
On the upside, Electronic Data Systems (up $1.83 to $23.12, Research) reported quarterly earnings late Wednesday that were in line with estimates and that reversed a loss from a year earlier. The computer services company also forecast 2006 earnings would top expectations.
Shares jumped nearly 9 percent in active New York Stock Exchange trade.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than two to one as 1.50 billion shares changed hands. On the Nasdaq, decliners topped advancers by a similar margin on volume of 1.62 billion shares.
Retailers see mixed July
The heat boosted July sales of air conditioners, fans, summer clothes and other products, all of which helped diverse retailers like Wal-Mart Stores (down $0.39 to $49.29, Research) but also put a crimp on products like fall clothing and back-to-school items.
Among the stocks moving, shoe retailers Payless ShoeSource (down $2.15 to $17.65, Research) and Shoe Carnival (down $5.84 to $18.16, Research) both slumped after reporting declines in same-store sales. Shoe Carnival also warned that second-quarter earnings would miss estimates as a result of that.
Youth apparel retailer Abercrombie & Fitch (down $4.68 to $65.56, Research) reported same-store sales that jumped 22 percent in July, but that was short of forecasts for a jump of 28.8 percent, and the stock suffered.
Chico's FAS (down $2.43 to $38.88, Research) fell after the women's clothing chain reported gross margins -- a key measure of profitability -- during the second quarter that were lower than expected.
That overshadowed the company's higher-than-expected July sales at stores open a year or more, known as same-store sales.
Home Depot (down $0.95 to $41.28, Research) and Sears Holdings (down $3.35 to $148.89, Research), neither of which report same-store sales, both got dragged down in the sell-off, too.
The S&P Retail (Charts) index slipped 2.2 percent.
The day's one economic report was the read on weekly jobless claims, which were lower than expected. Approximately 312,000 Americans filed new claims for unemployment last week, versus an upwardly revised 313,000 the previous week. Economists surveyed by Briefing.com thought 315,000 new claims would be filed.
However, the report was overshadowed by expectations about Friday's big monthly jobs report.
U.S. light crude oil for September delivery rose 52 cents to settle at $61.38 a barrel on the New York Mercantile Exchange, not far from the record closing high of $61.89 hit Tuesday.
Treasury prices inched lower, raising the yield on the 10-year note to 4.31 percent from 4.29 percent late Wednesday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and was barely higher versus the yen.
COMEX gold rose $1 to $443.70 an ounce.
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