NEW YORK (CNN/Money) - A late-day swoon sent stocks into the red for the final session of the month.

After being up as much as 110 points in afternoon trading, the Dow Jones industrial average finished down 7.49 points at 8,663.50. The Standard & Poor's 500 dropped 1.73 to 916.07, while the Nasdaq composite closed down 20.92 at 1,314.85.

Traders had spent much of the day watching the clock and waiting for the long weekend -- the market will be closed Monday for Labor Day -- to start. With few people left at their desks when the closing bell rang, the sudden drop was something of a mystery. The most likely cause: All the buyers simply weren't at their desks anymore.

"Everybody went home," said Phil Ruffat of Mizuho Securities USA's futures division.

Ruffat, who spent the final hour of trading watching an episode of "Magnum P.I.," said the coming week should make up for Friday's lack of activity. There are some big economic reports, and staffing at trading desks should be back near full force after the summer lull.

Good news on the economic front had cheered traders earlier.

The National Association of Purchasing Management-Chicago's report on regional manufacturing activity showed a surprise rise to 54.9 in August from 51.5 in July. Economists surveyed by Briefing.com were expecting a reading of 52.0. The jump in the Chicago report bodes well for the national Purchasing Managers' Index, due out on Tuesday. Meantime, July personal spending rose 1.0 percent versus expectations for growth of 0.8 percent, while personal income was unchanged versus expectations of an 0.3 percent gain.

There was, however, one sour note on the economic front. The University of Michigan's final August reading on its consumer sentiment index showed a slight decline to 87.6 from an initial reading of 87.9. Economists were expecting a reading of 88.0 compared with a revised reading of 88.1 in July, according to a consensus of economists surveyed by Briefing.com.

Traders found Federal Reserve Chairman Alan Greenspan's opening speech at the annual economic symposium in Jackson Hole, Wyo., a yawner. Rather than focusing on current policy, Greenspan stuck to commenting on what the Fed might have done to prevent the stock market bubble. (His answer? Nothing.)

For the week, the Dow slipped 2.4 percent, the S&P 500 dropped 2.6 percent and the Nasdaq fell 7.6 percent.

Volume was light, with just 898 million shares trading on the New York Stock Exchange and 1.1 billion shares changing hands on the Nasdaq. Advancers led decliners 1,799 to 1,365 on the NYSE. Decliners led 1,739 to 1,535 on the Nasdaq.

Sun (SUNW: down $0.14 to $3.69, Research, Estimates), the No. 1 maker of Unix servers, which are used to power Web sites and corporate networks, issued a fairly negative mid-quarter update after the close of trade Thursday, saying information technology spending had actually worsened in the early part of the quarter.

Sun's chief financial officer said fiscal first-quarter and fiscal year 2003 revenue will come in near the bottom of its previous forecast; the earlier forecast called for a dip of between 10 percent and 15 percent compared with the fourth quarter of fiscal 2002. On Friday, Credit Suisse First Boston, Bear Stearns and other brokerage firms lowered their earnings estimates for the quarter.

The company's warning and subsequent stock decline put broad pressure on the tech-fueled Nasdaq composite, although the index got some support from a recovery in some of the morning's chip selling.

Novellus Systems (NVLS: up $0.17 to $24.46, Research, Estimates), a chip-gear maker, warned in its mid-quarter update late Thursday that due to order delays from two major customers, the company now expects lower earnings per share, revenue and orders for the third quarter.

After the news, Merrill Lynch downgraded Novellus, as well as fellow chip-equipment makers Applied Materials (AMAT: down $0.08 to $13.36, Research, Estimates), KLA-Tencor (KLAC: down $0.75 to $32.87, Research, Estimates) and Lam Research (LRCX: down $0.32 to $11.63, Research, Estimates).

Telecoms again slid after regional telecom provider BellSouth (BLS: down $0.93 to $23.32, Research, Estimates) cut its 2002 earnings estimates by 7 cents to a range of $2.06-to-$2.13 a share, citing the soft economy and continued weakness in its wireless business.

Following the news, Goldman Sachs cut its earnings-per-share estimates for the Bells, including Verizon Communications (VZ: up $0.10 to $31.00, Research, Estimates) and Dow component SBC Communications (SBC: down $1.06 to $24.74, Research, Estimates). Merrill Lynch also downgraded the three stocks.

Dow component Boeing (BA: down $0.10 to $37.07, Research, Estimates), the world's biggest maker of commercial aircraft, rejected a request from federal mediators to resume contract talks with its machinists, but the union delayed plans to strike.

On an upbeat note, contract manufacturer Flextronics (FLEX: down $0.04 to $9.47, Research, Estimates) reaffirmed guidance in its mid-quarter update late Thursday, maintaining its forecast for a per-share profit of 8 cents in the current quarter and 12 cents in the next quarter.

Treasury prices were little changed, with the yield on the benchmark 10-year note closing at 4.19 percent. Bond prices and yields move in opposite directions. Treasury markets closed early at 1 p.m. ET ahead of the holiday weekend.

In international trade, European bourses closed the session and the week in positive territory, while Asian stocks ended mixed. The dollar erased earlier losses, increasing a little versus the euro and the yen.

Light crude oil futures were little changed in U.S. trade, while gold declined.