Updated from 4:08 p.m. EDT Blue-chips were showing gains for much of the day Friday, whereas tech stocks were lower for the entire session, but by the end of trading the major averages all had losses. Closing numbers on a quiet preholiday session showed the Dow Jones Industrial Average with a loss of 7.49 points to 8663.50. The S&P 500 gave up 1.73 points to 916.07, and the Nasdaq fell 20.92 to 1314.85. "The market was a little washed out after the last couple of days," said Joe Liro, equity strategist at Stone McCarthy Research. "But I wouldn't read anything into the action this week because there wasn't enough liquidity to make any of the moves meaningful." Volume on the New York Stock Exchange reached 896 million shares, while Nasdaq volume hit 1 billion shares. All told, it was the lightest full trading session of the year. U.S. markets will be closed Monday for the Labor Day holiday. After a weak start, sentiment improved on Wall Street following the release of the Chicago purchasing managers' index , which came in at 54.9 in August compared with 51.5 in July. Economists were looking for a reading of 52.0. Analysts said the data suggests July's drop in business confidence was overdone and that the national purchasing managers' index for August will show an increase. "That was a nice little number and certainly better than we were hoping for," Liro said, adding that he has revised up his forecast for the national PMI by 2 points, to 52.5. One disappointing element of the report was the employment index, which dipped to 44.6 from 48.1 in July. The prices paid component was reported at 63.6, compared with 64.5 last month. Other economic reports kept the tone subdued ahead of the long holiday weekend. The University of Michigan's consumer sentiment survey fell to 87.6 in August from 88.1 in July. That was below expectations for a reading of 88.0 and down from 87.9 in early August. The current conditions index was reported at 98.5 versus 99.3 last month, while the expectations index came in at 80.6 in August compared with 81.0 in July. Meanwhile, personal spending jumped 1% in July even as personal income remained flat, suggesting that consumers dipped into their savings to fund purchases. The increase in spending was the biggest since October 2001 and above expectations for a 0.8% rise. Economists had forecast a 0.3% increase in income. "There is a real concern," noted Liro. "We need faster income growth to support spending. A lot is being supported right now by the refinancing boom." Cautious comments from a handful of tech bellwethers also weighed on the market Friday. In a midquarter update late Thursday, Novellus ( NVLS) trimmed its third-quarter sales targets, citing a "cutback in capital expenditures by major companies in the industry." "The outlook is very, very murky and the general feeling tends to be negative rather than positive," said CEO Richard Hill. Merrill Lynch cut its rating on the stock to midterm neutral from buy and sliced its 2002 and 2003 earnings estimates on the stock, citing the weaker-than-expected sales, orders and shipments. Still, shares rose 17 cents to $24.46. Merrill also downgraded three other chip-equipment stocks. Sun Microsystems ( SUNW) lost 14 cents to $3.69, however, after saying its revenue for the current quarter was likely to slide as much as 15% or more sequentially. CEO Steve McGowan also said he hasn't seen any improvement in tech spending and that it "might actually be worsening." He did note, however, that Sun's fiscal first quarter has historically been back-end loaded, meaning the bulk of sales occur toward the end and there are still five weeks left to go in the 13-week quarter. In the telecom space, the nation's third-largest local telephone company BellSouth ( BLS) lowered its guidance for 2002 for a second time, citing a slowdown in its wireless business, the effect of restructuring charges and overall economic weakness. Shares slid 4% to $23.32. Separately, Federal Reserve Chairman Alan Greenspan said the U.S. central bank couldn't have deflated the stock-market bubble in the late 1990s without hiking interest rates to a level that would have pushed the economy into a severe recession.