NEW YORK (CNN/Money) - U.S. stocks were primed for a weaker open Friday, with investors pulling back after a strong runup on discouraging quarterly reports from Ericsson and Sun Microsystems, despite Microsoft's better-than-expected profit.

The expiration of options also looked likely to play a role in stock declines and volatility. Stock futures pointed to a lower start for the major indexes, which are coming off substantial gains Thursday.

"My suspicion is that investors may wish to play it safe as they approach the weekend and start over fresh again next week," said Khuram Chaudry, Merrill Lynch equity strategist in London. "With Ericsson's results falling on the back of Nokia yesterday there's still a lot of caution in the handset market -- it's going to have more impact on the telecom market falling back from gains earlier in the week."

Microsoft (MSFT: Research, Estimates) gave a lift to futures with its report late Thursday. The world's largest maker of PC software posted better-than-expected earnings and raised expectations for all of its fiscal year. Shares of the stock gained $1.33 to $52.10 in pre-market trade Friday.

For details of Thursday's rally, click above

But Ericsson (ERICY: Research, Estimates), the Swedish-based developer of wireless networks, put a damper on any enthusiasm Friday with a wider-than-expected third-quarter loss, a 29 percent drop in sales and a 46 percent decline in orders. U.S. shares of the company lost 5 cents to 51 cents in pre-market trade Friday; their 52-week high is $6.24. The company announced early Friday that its board has approved a consolidation of its U.S. shares on a 1-for-10 basis in order to meet Nasdaq price requirement minimums.

In addition, No. 1 Unix server maker Sun Microsystems (SUNW: up $0.19 to $2.99, Research, Estimates) reported a return to a quarterly loss in its fiscal first quarter after seeing a profit in the previous quarter. The company lost 2 cents a share. Analysts expected a loss of 4 cents; the company lost six cents in the year-earlier period. The company also said it will cut 11 percent of its work force to try to deal with the slowdown in its business and issued vague forward-looking statements.

On Thursday, the Dow Jones industrial average made back what it lost the day before with a little to spare, gaining 239 points. Unless the Dow loses something in the vicinity of 424 points, it will post its second-straight weekly gain. The Nasdaq composite index, up almost 40 points Thursday, is 62 points ahead for the week entering Friday's session.

After the closing bell Thursday, Standard & Poor's said it downgraded debt ratings on several brokerage houses, including Merrill Lynch (MER: Research, Estimates), Goldman Sachs (GS: Research, Estimates) and Morgan Stanley (MS: Research, Estimates) to "A1" from "A1+."

Also Thursday, investment bank Merrill Lynch lowered its earnings expectations on aircraft maker Boeing (BA: Research, Estimates) through 2004, citing falling pension plan returns and weakness in its space unit and commercial jet support. Merrill cut its estimates on the Dow component to $2.25 per share from $2.65 for 2003, and to $2.90 per share from $3.30 for 2004.

European markets were lower at midday after the Ericsson announcement, while Asian-Pacific stocks rose Friday, following in the footsteps of their U.S. counterparts.

Treasury prices rose in early trading, sending the 10-year note yield down to 4.14 percent. The dollar strengthened against the yen, but was weaker versus the euro.

Brent oil futures fell 14 cents to $27.83 a barrel in London. Gold slipped in early trading.

In the day's economic news, the Labor Department's reading of consumer prices in September showed a rise of 0.2 percent, in line with estimates. Excluding volatile food and energy costs, CPI rose 0.1 percent when economists expected a rise of 0.2 percent. Both measures rose 0.3 percent in August.

The Commerce Department's report on the August trade gap showed a surprise rise to $38.5 billion, economists were only expecting an increase to $35.5 billion.

On an up note, online auction site eBay (EBAY: Research, Estimates) reported a second-quarter profit of 22 cents a share versus a year-earlier profit of 12 cents. Analysts were only expecting a 20-cent per share profit. However, the company issued fourth-quarter and fiscal year 2003 earnings per share guidance that is less than what analysts are expecting. Shares of the stock fell $2.65 to $55.50 in before-market trade Friday.

Business software maker Siebel Systems (SEBL: Research, Estimates) reported its first quarterly loss in four years late Thursday and said its fourth-quarter results will miss estimates. On Friday, the company had its rating cut to "buy" by Deutsche Securities. Shares of the stock lost $1.28, or 17 percent, to $6.02 in pre-market trade Friday.

Israeli Internet security company Check Point Software Technologies (CHKP: Research, Estimates) reported lower third-quarter profit from a year earlier, in line with estimates and warned that its fourth-quarter results will be flat to slightly lower versus the third-quarter. The company blamed fewer large deals for the setback. Shares of the stock lost $2.73, or 16 percent, to $14 in pre-market trade Friday.

Shares of communications chip maker Broadcom (BRCM: Research, Estimates) lost 3 cents in its third quarter, in line with estimates and an improvement over the 13 cents per share lost a year earlier. But the company warned that current quarter revenue will be flat from the third-quarter and below analysts' expectations due to weakness in the market for television set-top boxes, for which it supplies chips. Shares of the stock lost $1.45, or more than 11 percent, to $11.

Investment bank Credit Suisse First Boston downgraded shares of Leggett & Platt (LEG: Research, Estimates) to "neutral" from "outperform" and dropped its price target to $25 a share from $30 citing the diversified manufacturer's stock valuation and lack of visibility for 2003. Shares of Leggett & Platt rose $1.40 to $22.21 Thursday.

Credit Suisse reduced its rating on Fortune Brands (FO: Research, Estimates) to "neutral" from "outperform," citing the consumer products company's valuation relative to the group. Shares of Fortune Brands rose $3.42 to $52.42 Thursday.

CSFB raised its 2002 earnings estimate on newspaper publisher New York Times (NYT: Research, Estimates) to $1.98 a share from $1.94 and increased its target price to $54, citing the firm's assumption that advertising will follow a solid recovery path in 2003. Shares of New York Times rose $1.82 to $47.70 Thursday.

The firm also downgraded computer storage company EMC (EMC: Research, Estimates) to "neutral" from "outperform," cut its price target to $5 a share from $7, and slashed its 2003 earnings estimate to a penny a share from 8 cents a day after the company said revenue would be flat for the current quarter. Shares of EMC fell 16 cents to $4.60 in trading Thursday.

CSFB downgraded ChoicePoint (CPS: Research, Estimates) to "neutral" from "outperform" and slashed its price target to $37 a share from $50, citing the recent stock run-up and slow growth prospects. Shares of the identification verification services provider gained $3.49 to $38.69 Thursday.

Merrill Lynch downgraded Sybase (SY: Research, Estimates) to "neutral" from "buy" a day after the server and software provider reported third-quarter earnings that were in line with estimates. Sybase shares rose 28 cents to $12.58 Thursday.

Merrill Lynch also cut its rating for healthcare company Baxter International (BAX: Research, Estimates) to "neutral" from "buy," citing reduced sales and earnings visibility for the fourth quarter and 2003. Shares of Baxter fell $2.51 to $26.75 Thursday.