Wall Street report: Friday close

SLUGGISH outlooks from tech giants

'The news today coming from two key bellwethers is taking away some of the recent enthusiasm,' said Steven Goldman, chief market strategist at Weeden & Co.

IBM fell $4.75 to $81.30 after the computer company reported a drop in fourth-quarter profits but beat analysts' estimates. However, it also issued a cautious outlook for 2003. Microsoft dropped $3.89 to $51.46 after the software maker said it saw no signs of improving demand.

'Earlier in the year, we had a rally based on the feeling that companies will come in better than expected. That did happen, but the problem is that it may not continue,' said Stephen Massocca, president of Pacific Growth Equities.

The mixed earnings news as well as concerns about a war with Iraq have left many investors uncertain, leading to cautious and choppy trading. On Friday, Iraqi President Saddam Hussein called on his people to rise up and defend the nation against a new US-led attack and promised that Iraq's enemies would face 'suicide' at the gates of his capital.

A trio of disappointing economic reports also weighed on stocks. The University of Michigan's mid-month report on consumer sentiment for January fell to 83.7 from 86.7 in December - short of economists' expectations of 86.4.

Meanwhile, the Federal Reserve reported that production in the industrial sector unexpectedly dipped by 0.2% in December, more than erasing a 0.1% gain the previous month. Analysts had forecast a 0.2% increase.

And the US trade deficit grew to a record $40.1bn in November, reflecting Americans' ravenous appetite for foreign-made goods, especially toys, TVs and clothes. Analysts were predicting a $36.4bn imbalance.

General Electric lost 15 cents to $24.88 after the company reported reduced earnings but in line with analysts' estimates.

AOL Time Warner fell 49 cents to $14.81 after its board selected chief executive Dick Parsons to be its new chairman as well, replacing AOL co-founder Steve Case, who said last week that he was stepping down. Advanced Micro Devices slid $1.17 to $6.03 after the chip maker's fourth-quarter losses were wider than feared.