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NEW YORK (CNNMoney.com) -- Stocks slipped Friday, but managed to trim losses by the close, after surprisingly weak surveys on manufacturing and consumer sentiment revived worries about the threat of a recession.

With 30 minutes left in the session, the Dow Jones industrial average (INDU) had lost 0.5%, the broader Standard & Poor's 500 (SPX) index had lost about 0.3% and the Nasdaq composite (COMP) had fallen 0.7%.

"There are recession worries, there are dollar worries and there continue to be inflationary worries," said Tom Schrader, managing director at Stifel Nicolaus.

Those concerns were highlighted Friday by the weak manufacturing and consumer sentiment reports and the big rise in Jan. import prices, he said.

However, he said that the concerns were pretty contained today, otherwise the declines would have been a lot steeper.

Stock trading was fairly quiet ahead of the long holiday weekend, with all financial markets closed Monday for the Presidents' Day holiday.

Eye on the economy. Stocks slumped Thursday as well, as investors reacted to Federal Reserve Chairman Ben Bernanke's Congressional testimony that economic conditions are likely to get worse before they get better.

That outlook was demonstrated Friday by the NY Empire State index, a regional manufacturing report that showed a surprise reading of -11.7 versus forecasts for a positive reading of 7. Any negative reading suggests contraction in the sector.

Another report, the University of Michigan's February consumer sentiment index, showed a bigger-than-forecast dip to 69.6 from 78.4 in the previous month. Economists thought it would fall to 76.5.

Additionally, industrial production ticked up, according to another government report that also showed flat capacity utilization in January. Finally, Jan. import and export prices jumped from the previous month, another report showed.

Bernanke and Greenspan on recession risks. On Thursday, Bernanke told the Senate Banking Committee that the outlook for the economy has worsened recently and that the risks to growth remain to the downside.

However, Bernanke said that the economy should avoid a recession thanks to the fiscal and monetary policy that is in place. That includes the government's $170 billion fiscal stimulus plan and the series of interest-rate cuts and loans to commercial banks the Fed has instituted over the last 5 months.

On Friday, former Fed chief Alan Greenspan said there's at least a 50% chance the economy will fall into a recession.

Bernanke also discussed the risk the bond insurers pose to the already strapped financial sector, amid the credit crisis. On Friday, FGIC said it wants to split its healthy healthy municipal bond insurance arm from its troubled structured finance arm. (Full story).

Company news. Best Buy (BBY, Fortune 500) warned that 2008 earnings won't meet forecasts. Shares fell nearly 3% in active New York Stock Exchange trade.

Late Thursday, data networking provider Brocade Communications (BRCD) posted quarterly earnings that fell from a year ago but nonetheless topped forecasts. Shares rallied Friday.

Warren Buffett's Berkshire Hathaway said in a regulatory filing released late Thursday that it has boosted its Kraft (KFT) and GlaxoSmithKline (GSK) holdings. Both stocks jumped Friday.

Arris Group (ARRS) plunged 30% in unusually active Nasdaq trade after the cable phone and television services provider reported a steep drop in quarterly profit and warned that current-quarter results won't meet forecasts.

A variety of big blue chips dipped, with 23 out of 30 Dow components declining, led by Citigroup (C, Fortune 500), Honeywell (HON, Fortune 500), United Technologies (UTX, Fortune 500) and Intel (INTC, Fortune 500).

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers two to one on volume of 1.2 billion shares. On the Nasdaq, losers beat winners by over two to one on volume of 1.73 billion shares.

Other markets. Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.78% from 3.80% late Thursday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and euro.

U.S. light crude oil for March delivery rose 4 cents to settle at $95.50 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery lost $4.70 to settle at $906.10 an ounce.