NEW YORK (CNNMoney.com) - A steep selloff in chips and other tech stocks sent the Nasdaq tumbling Thursday, ahead of Friday's closely-watched read on the labor market.

As of 6:00 p.m. ET, Nasdaq and S&P futures pointed to a flat open for stocks, when fair value is taken into account.

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The Nasdaq composite (down 17.74 to 2,249.72, Charts) lost about 0.8 percent. The Dow Jones industrial average (down 33.46 to 10,972.28, Charts) lost about 0.3 percent and the broader Standard & Poor's 500 (down 6.24 to 1,272.23, Charts) index fell about 0.5 percent.

Concerns about a slowdown in semiconductor sales as well as weakness in Google (Research) weighed on techs.

"The (Philadelphia Semiconductor Index) has come under pressure," said Art Hogan, chief market analyst at Jefferies and Co. "It offered leadership earlier in the session but it's down now. There's ongoing concern of a slowdown in semiconductor sales."

Stocks made headway early in the session as investors cheered a policy move in Japan that sent the Nikkei higher 2.5 percent, but the gains fizzled out by midday. The Bank of Japan said it would start raising interest rates, but not right away, after keeping them effectively at zero for years.

But rising oil prices and disappointing economic news weighed on sentiment, as did continued worries about the bond market.

Investors also focused on Friday's February payrolls report, which may be the most important economic data of the month, according to Hogan. "The one thing the Fed looks at the most is the economy's ability to create jobs," he said.

Employers are expected to have added 210,000 jobs to their payrolls in February, after adding 193,000 the previous month, according to a consensus of economists surveyed by Briefing.com.

The best bet for stock market sentiment would probably be if the payrolls number were to come in roughly in line with forecasts, but not better, said Maria Fiorini Ramirez, president of money manager Maria Fiorini Ramirez Inc.

"If it's too good a number, that combined with higher interest rates would probably bother the stock market," she added.

Investors will also be looking at the average hourly earnings component of the report to see if it indicates growing wage inflation.

The unemployment report, generated by a separate survey, is expected to have held steady at 4.7 percent.

Treasury bond prices ended the session little changed, with the 10-year note yielding 4.72 percent, just above that of the 2-year note, which is currently yielding 4.71 percent.

The flattening of the yield curve, which had inverted Wednesday, was another cause of concern for investors, as it can indicate slowing economic growth.

Chipmakers lost ground, with the Philadelphia Semiconductor (down 7.09 to 503.53, Charts) index, or the SOX, falling about 1.4 percent.

The sentiment on chips was dour enough to knock down National Semiconductor (down $0.85 to $27.18, Research), even though the company's midday earnings report was strong. The chipmaker reported higher earnings, revenue and gross margins than had been expected. Some analysts speculated that investors may have been concerned about a buildup in inventories.

Google (down $10.88 to $343.00, Research) shares slid over 3 percent as the company's latest blunder continued to weigh on investors. The Internet search giant said late Tuesday it mistakenly posted sales projections on the Web during its recent analyst meeting. The company also said Wednesday it agreed to settle a class action lawsuit over advertising fraud by outside parties on its site for up to $90 million.

A number of other Internet issues declined too, with the Goldman Sachs Internet (Charts) index losing 1.2 percent.

NYSE Group (down $3.90 to $76.10, Research) fell about 5 percent in its second day as a publicly traded company after surging 25 percent in its market debut.

Home builders also lost ground, with the Dow Jones Home Construction (down $16.73 to $822.91, Research) index shedding 2 percent.

General Motors (up $0.92 to $21.34, Research) offered support for the Dow industrials, rising 4.5 percent on media reports that the automaker and its auto parts supplier Delphi are nearing an agreement with the United Auto Workers (UAW) Union to avoid a strike and cut labor costs.

But the UAW in a brief statement denied that the two sides were near an agreement.

Nonetheless,the GM news helped boost other auto stocks, with Ford (up $0.20 to $7.75, Research) advancing 2.7 percent and DaimlerChrysler (up $0.80 to $55.12, Research) adding about 1.5 percent.

Sun Microsystems (up $0.16 to $4.51, Research) added 3.4 percent in active Nasdaq trading after Lehman Brothers upgraded it to "equal-weight" from "underweight."

Biogen Idec (up $2.03 to $47.54, Research) added 4.5 percent in heavy Nasdaq trading, after a Food and Drug Administration advisory panel said that its withdrawn multiple-sclerosis drug Tysabri should be brought back to market, albeit with restrictions.

Market breadth was negative. On the New York Stock Exchange, losers topped winners eight to seven on volume of 1.55 billion shares. On the Nasdaq, decliners topped advancers as by close to three to two as 2.07 billion shares changed hands.

Crude futures rebounded after tumbling the previous session. U.S. light crude oil for April delivery added 45 cents to settle at $60.47 a barrel on the New York Mercantile Exchange.

Investors also took in a pair of economic reports that missed expectations. Jobless claims rose by 8,000 to 303,000 last week, according to an early report that exceeded analysts' estimates. A separate report showed that the January trade balance widened to $68.5 billion in January, versus forecasts for a rise to $66.5 billion.

In global trade, major Asian markets and European markets ended higher.

In currency trading, the dollar gained against the euro and yen.

COMEX gold for April delivery rose $2.80 to $547.10 an ounce.

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