Trading was quiet, as it has been all week, as summer vacations kept many traders out of the market. With fewer participants, the market lost some of its recent momentum that had sent the major indexes up about 5 percent in less than two weeks.
Stocks managed to carve out their sixth weekly advance in seven weeks, but the gains were minimal.
Wall Street turned cautious this week as investors worried that the market's rally, now closing in on six months, may have run its course.
Investors are especially nervous as they head into September, historically the stock market's worst month. Last September, which saw the collapse of Lehman Brothers and the kickoff of the worst financial crisis in decades, is still fresh in investors' minds.
"Tuesday begins one of the most feared months of the calendar," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors.
The first week of September 2009 will bring a key report on manufacturing activity, which has been improving, as well as the Labor Department's monthly report on job losses - the month's most telling piece of economic data. Last month, news that employers cut fewer jobs in July and the unemployment rate fell sent stocks soaring.
On Friday, the Dow fell 36.43, or 0.4 percent, to 9,544.20. The Standard & Poor's 500 index fell 2.05, or 0.3 percent, to 1,027.76, while Nasdaq composite index fell 1.47, or 0.1 percent, to 2,026.26.
The market got an initial boost after Intel, the world's largest maker of computer chips, raised the top end of its sales forecast for the current quarter from $8.9 billion to $9.2 billion.
Intel's upbeat report came after computer maker Dell Inc. posted better-than-expected results for its May-July quarter late Thursday. While sales continued to fall because of reduced spending by consumers and businesses, Dell said it has seen signs of improvement.
Investors also got more data Friday on the consumer, a focal point for investors in recent weeks worried that sluggish spending will hinder the economy's recovery.
The Commerce Department said consumer spending rose 0.2 percent in July, which was in line with economists' expectations. The latest report also said personal income was flat in July. Economists had expected a 0.2 percent increase.
Growth in spending and consumer confidence has been hampered by rising unemployment. Investors are hoping next week's jobs report will provide more evidence that job losses are slowing.
As of Friday, both the Dow and the S&P 500 are on track to have their best Augusts since 2000, each up just over 4 percent for the month. That's well above the S&P's 20-year average of a negative return of 0.5 percent in August.
Most of the gains were made last week, after Federal Reserve Chairman Ben Bernanke's upbeat assessment of the economy sent investors clamoring for stocks. This week, the Dow and the Nasdaq gained just 0.4 percent, while the S&P 500 rose 0.3 percent.
Bond prices were little moved. The yield on the 10-year Treasury note held steady at 3.46 percent.
Oil rose 25 cents to settle at $72.74 on the New York Mercantile Exchange. Oil hit $75 during the week, a high for the year.
The dollar fell against other major currencies, while gold prices rose.
Advancing issues narrowly outpaced decliners on the New York Stock Exchange, where volume came to a light 1.19 billion shares, compared with 1.16 billion at the close of trading on Thursday.