NEW YORK (CNN/Money) - The U.S. stock market closed lower Friday and mixed for the week as investors bailed out of a variety of sectors ahead of a three-day holiday weekend.

The Nasdaq composite (down 20.05 to 2053.56, Charts) fell 1 percent, the Dow Jones industrial average (down 66.22 to 10627.85, Charts) lost 0.6 percent and the Standard & Poor's 500 (down 6.30 to 1145.81, Charts) index lost 0.5 percent.

For the week, the Dow gained 0.3 percent and the S&P 500 gained 0.26 percent. Both indexes gained for the second week in a row. The Nasdaq lost 0.5 percent, falling for the fourth week in a row.

A weaker-than-forecast consumer sentiment report in the morning and a natural bout of profit taking after the recent rally, which saw the Dow close at 32-month highs, were among the factors dragging on the market throughout the session.

In addition, a morning report about a suspicious powder found at a post office in New Jersey also helped provide an incentive for profit taking, analysts said. However, reports later in the day said that tests of the New Jersey powder came back negative for any harmful substances.

Volume was light due to many traders bailing out early ahead of the three-day holiday weekend. Equity and bond markets are closed Monday in honor of Presidents' Day.

But on a broader level, "the market is essentially taking a breather today," said Peter Green, a market analyst at MKM Partners.

Despite the mild weekly tallies, the five sessions were fairly news-packed, in particular, Wednesday in which a blue-chip rally led the Dow to close at its highest level since June 2001 and the S&P 500 to close at its highest level since March 2002.

On Wednesday, Comcast announced its uninvited bid for media behemoth Walt Disney and Federal Reserve Chairman Alan Greenspan began the first of his two days of congressional testimony on the health of the economy. Greenspan said that the economy is tracking to continue growing at a robust pace this year, but that despite that, interest rates can remain low a bit longer. It was seen as a 'best of both worlds' scenario that seemed to be exactly what both stock and bond markets wanted to hear.

However, the gains led to profit taking over the next two sessions.

As has been the case for the last few weeks, the Nasdaq composite, and to a larger extent, the technology sector, lagged the broader market as investors sought to get out of some of 2003's biggest gainers and pick up some of the cyclical and household names that have had less of a run up recently.

Markets are closed Monday. Economic reports are due later in the week on the housing market, producer prices, manufacturing in the New York State and Chicago regions, as well as consumer and producer prices.

Although most of the fourth-quarter earnings are done week, next week does bring reports from retailer Abercrombie & Fitch (ANF: up $0.62 to $28.30, Research, Estimates) on Tuesday and Applied Materials (AMAT: down $0.28 to $21.77, Research, Estimates) on Wednesday.

The market started the day higher, but was sent lower when investors learned that the University of Michigan's consumer sentiment index came in at a preliminary 93.1 for February, down sharply from the final January reading of 103.8. The reading was 10 points below economists' expectations.

Stocks then temporarily bounced back, before giving up and heading lower.

Also seen as adding to the declines was a government report that showed the U.S. trade deficit grew in December, more than economists were expecting, due in part to a decline in exports.

Adding to the downturn was the mixed performance in the technology sector. On the upside, after the close Thursday, Dell (DELL: up $0.98 to $34.55, Research, Estimates) issued a bullish forecast for technology spending growth in 2004. The company also reported earnings of 29 cents a share, a penny more than forecasts and up from 23 cents a year earlier. Dell also said that fiscal first-quarter results will meet expectations on both an earnings per share and revenue basis. The stock gained 2.9 percent.

However, semiconductors were weaker. Banc of America Securities cut Intel (INTC: down $0.60 to $30.14, Research, Estimates)'s first-quarter earnings per share and revenue forecasts, citing weaker-than-forecast notebook demand. Intel fell more than 2 percent and was active on the Nasdaq. The company is also a component of the Dow industrials and has an impact on a number of technology stocks.

In addition, "the chips didn't react favorably to what Dell had to say about computer shipments, so you're seeing weakness there," Green added.

After two sessions of rallies following Comcast's (CMCSA: down $0.16 to $29.90, Research, Estimates) uninvited $54 billion buyout offer, shares of Walt Disney (DIS: down $1.08 to $26.92, Research, Estimates) retreated on some profit taking, losing 3.8 percent. The stock was the Dow's biggest decliner.

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In other corporate news, shares of AT&T Wireless (AWE: up $0.15 to $11.82, Research, Estimates) added 1.3 percent ahead of the 5 p.m. ET deadline for buyout bidders. Vodafone (VOD: up $0.85 to $25.76, Research, Estimates) and Cingular are both considered the top candidates.

ImClone (IMCL: Research, Estimates) rallied 28.8 percent Friday, one session after the biotech was granted regulatory approval of its cancer treatment Erbitux. Erbitux is at the center of an insider trading scandal that has resulted in the company's founder, Sam Waksal, serving jail time and has put home decor doyenne Martha Stewart on trial.

On Thursday, the stock fell more than 20 percent right before being halted for the announcement of the approval, then was halted for the rest of the session. Nasdaq is investigating the abrupt drop.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost five to three as 1.29 billion shares changed hands. On the Nasdaq, decliners topped advancers by about two to one as 1.77 billion shares traded.

Treasury prices rose slightly. The 10-year note gained 4/32 of a point, with the yield at 4.04 percent. The dollar recovered from early weakness, turning higher against the yen and euro.

NYMEX light sweet crude oil futures rose 72 cents to settle at $34.10 a barrel. COMEX gold fell $3.40 to settle at $410.80 an ounce.