Stocks rose slightly Friday, with the blue-chip Dow average hitting a fresh 18-month high, as positive forecasts from United Technologies (UTX) and Coca-Cola (KO) offset a worse-than-expected reading on consumer confidence.

The Dow Jones industrial average (search) closed up 34.00, or 0.3 percent, at 10,042.16, according to preliminary calculations. That extended the index's gains from Thursday, when it closed above the 10,000 mark for the first time in 18 months, largely on the news about interest rates and a strong retail sales report for November.

The broader market gauges also closed modestly higher Friday. The Nasdaq composite index (search) ended the day up 6.68, or 0.3 percent, at 1,949.00. The Standard & Poor's 500 index (search) closed up 2.93, or 0.3 percent, at 1,074.14.

For the week, the Dow rose 1.8 percent and the S&P 500 gained 1.2 percent, marking the third straight week of gains for both indexes. The Nasdaq ended the week up 0.6 percent.

"The real resistance level now will be 10,150," said Tim Smalls, a trader at SG Cowen Securities. "People are still very skeptical after losing money over the last four years, but this market is slowly winning them over."

Wall Street welcomed a government report that wholesale prices declined more than expected, suggesting inflation remains well under control, and appeared unconcerned about news that the trade deficit had widened slightly. Stocks stumbled a bit after a survey by the University of Michigan said consumer confidence was on the wane, but pushed higher by the end of the session.

The university's preliminary report for December was said to have shown a sharp decrease in consumer sentiment, to 89.6 from 93.7 in November, Dow Jones Newswires reported, citing people who had seen the data. Analysts had forecast a reading of 95.2 for mid-December. The survey is released only to subscribers.

"Of the three reports, that was the most important and probably dampened some of the enthusiasm that surfaced yesterday with the retail sales report," said Lynn Reaser, chief economist and senior market strategist at Banc of America Capital Management. "We still need to see whatever revisions there are to be made and how consumers actually behave."

The Labor Department (search) reported a 0.3 percent drop in the Producer Price Index (search), which measures prices of goods before they reach store shelves. Economists had forecast a 0.1 percent rise. The reading supported the idea that the economic recovery is not fanning inflation, and bolstered hopes that interest rates would stay low.

Separately, the Commerce Department (search) said the trade deficit soared to $41.77 billion in October. Shoppers' preference for imports hit a record high, offsetting a sizable gain in exports, including the best showing for sales of farm products in seven years. The October trade imbalance was up 1 percent from a September deficit of $41.34 billion and was the biggest deficit in five months.

United Technologies (UTX) topped percentage gainers on the Dow after the company forecast double-digit earnings and revenue growth next year. Shares of United Tech, the maker of products including Black Hawk helicopters and Pratt & Whitney jet engines, rallied $2.33, or 2.61 percent, to $91.60.

Coca-Cola Co. (KO) shares also jumped, after the company backed its long-term earnings growth target and forecast strong results in 2004, helped by the weak dollar. Shares of Coca-Cola, the world's largest soft drinks maker, rose 98 cents, or 2.03 percent, to $49.37 and were the Dow's second-biggest percentage gainer.

Coca-Cola also forecast cash from operations would remain strong next year, letting it buy back at least $2 billion of its common shares, up one-third from what it planned to buy back this year.

On the Nasdaq, Adobe Systems Inc. (ADBE) added 42 cents, or 1.06 percent, to $40.20 after it reported late Thursday its quarterly profit doubled from a year earlier, beating company and Wall Street targets. Adobe also forecast higher revenue and current quarter earnings and said it planned to hire modestly throughout the company in fiscal 2004.

General Motors Corp. (GM) rose 86 cents to close at $49.79 after saying it expects its U.S. hourly and salaried pension plans to be nearly fully funded by the end of 2003. The news means GM probably won't have to make more cash contributions to the plans until at least 2010, based on planned additional contributions this year and normal asset returns.

Still, there were signs that investors were not sure the gains would hold through the holiday season. Retailing bellwether Wal-Mart Stores Inc. (WMT) lost 31 cents to end the day at $52.50.

AT&T Corp. (T) closed down 64 cents, at $18.98, after lowering the revenue outlook for its business services unit, citing pricing pressures. The telecommunications company said would adopt an aggressive strategy to fight competition.

The Russell 2000 index, which tracks smaller company stocks, closed up 4.67, or 0.9 percent, at 547.59.

Overseas, Japan's Nikkei stock average finished 0.9 percent higher Friday. In Europe, France's CAC-40 rose 0.1 percent, Britain's FTSE 100 gained 0.4 percent and Germany's DAX index was essentially flat, up 0.03 percent.

Reuters and the Associated Press contributed to this report.