By Jennifer Coogan
Reuters
Friday, December 29, 2006; 4:49 PM

NEW YORK (Reuters) - U.S. stocks slipped on Friday, the last trading day of 2006, as investors exited positions before an unplanned four-day weekend, but the Dow still finished near its lifetime high, capping off what has been a bullish year for all three major indexes.

Telecommunications -- the year's best-performing sector -- ended the year with a bang after a report of private equity interest in Alltel Corp., sent shares of the fifth-largest U.S. wireless operator surging.

A rebound in shares of Apple Computer Inc. helped to limit the Nasdaq's decline.

Despite the positive corporate news, some traders were loathe to keep positions open for the longer-than-expected holiday weekend.

U.S. stock trading will not resume until Wednesday, with markets closed on Tuesday to observe a national day of mourning for former U.S. President Gerald Ford, who died earlier this week. Markets will be closed on Monday for New Year's Day.

"It looks like the market will be going out this year with a whimper and not a bang although it appears it will be closing virtually on its high for 2006," said Tim Biggam, options strategist at Man Securities, an options brokerage firm in Chicago.

The Dow Jones industrial average <.DJI> fell 38.37 points, or 0.31 percent, to 12,463.15. The Standard & Poor's 500 Index <.SPX> declined 6.43 points, or 0.45 percent, to 1,418.30. The Nasdaq Composite Index <.IXIC> dropped 10.28 points, or 0.42 percent, to 2,415.29.

"It will more important to see how the market responds coming the end of next week when the major players return from what has become an elongated holiday," Biggam said.

Declines in some software shares kept the Nasdaq just short of a double-digit gain for the year. The tech-heavy index finished up 9.5 percent, while the S&P 500 gained 13.6 and the Dow surged 16.3 percent.

For the week, the Dow added about 1 percent, while the S&P 500 advanced 0.5 percent and the Nasdaq gained 0.6 percent.

Security software maker Symantec fell 2 percent, or 43 cents, to $20.85, making it the top-weighted drag on the Nasdaq. Other declining software shares were Microsoft Corp. , down 0.4 percent, or 12 cents, at $29.86, and Adobe Systems , down 1 percent, or 41 cents, at $41.12.

Apple shares jumped 4.9 percent, or $3.97, to $84.84 on the Nasdaq as the company said in a regulatory filing that Chief Executive Steve Jobs, who was aware of or recommended certain stock options grant dates, did not receive any financial benefit from improper option grants. For details, see

Shares of Goodyear Tire & Rubber Corp. jumped nearly 5 percent after union workers voted to end a three-month-old strike, ratifying a contract that will save the No. 1 U.S. tire maker as much as $610 million .

Goodyear stock rose 98 cents to end at $20.99 on the

NYSE.

Volume was light on the NYSE, with about 1.02 billion shares billion shares changed hands, sharply below last year's daily average of 1.61 billion. On the Nasdaq, about 1.42 billion shares were traded, also well below last year's daily average of 1.80 billion.

Decliners outnumbered advancers by a ratio of abut 5 to 3 on the NYSE, while on the Nasdaq, about three stocks fell for every two that rose.

(Additional reporting by Doris Frankel)