Stocks slipped on Friday as data showed the U.S. economy grew less than expected in the fourth quarter, while some disappointing earnings added pressure to the market.

Government data showed U.S. gross domestic product expanded at its fastest pace in 1-1/2 years in the fourth quarter of 2011 but fell shy of expectations. A strong rebuilding of inventories and weak spending by businesses pointed to slower growth early this year, denting recent optimism about an improving economy.

But losses were curbed as Federal Reserve statements this week and economic data kept investors alert for the possibility of another round of monetary stimulus known as quantitative easing, or QE3.

Out of what the Fed said, you can expect some negative numbers because the Fed obviously saw what the GDP numbers are and they anticipate a slowdown, said Sean Kraus, chief investment officer at CitizensTrust in Pasadena, California.

If the Fed does resort to QE3 to stimulate growth, investors don't want to be caught flat-footed and be out of risky assets, Kraus said.

Chevron Corp fell 3.1 percent to $103.26 and was the biggest drag on the Dow after the No. 2 U.S. oil company posted lower earnings, missing Wall Street forecasts. The NYSEArca oil index <.XOI> lost 0.7 percent.

The Dow Jones industrial average <.DJI> dropped 60.06 points, or 0.47 percent, to 12,674.57. The Standard & Poor's 500 Index <.SPX> dipped 2.69 points, or 0.20 percent, to 1,315.74. The Nasdaq Composite Index <.IXIC> gained 7.46 points, or 0.27 percent, to 2,812.74.

Procter & Gamble Co
dipped 0.7 percent to $64.35 after said this year's profit would come in lower than previously expected due to the strong dollar.

Ford Motor Co shares fell 1.7 percent to $12.52 after the carmaker reported a lower-than-expected fourth-quarter profit on higher commodity costs and losses in Europe and Asia.

Network equipment makers Juniper Networks Inc and Riverbed Technologies Inc gave first-quarter outlooks after the close Thursday that were below expectations. Juniper fell 3.9 percent to $21.50 while Riverbed plunged 22.4 percent to $23.22.

According to Thomson Reuters data, 58.7 percent of 184 S&P 500 companies reporting earnings through Friday have topped analysts' estimates, below the beat rate of about 70 percent seen at this stage of earnings season in recent quarters.

Utilities moved lower after results from American Electric Power , off 2.9 percent to $40.07, and Dominion Resources , down 0.8 percent to $50.44. The S&P utilities index <.GSPU> fell 1.1 percent.

Eastman Chemical Co offered to buy specialty chemical maker Solutia Inc for about $3.38 billion in cash and stock to extend its reach in emerging markets, particularly the Asia-Pacific region. Solutia shares rose 41 percent to $27.59.

Euro zone finance officials voiced optimism a deal to avert a disorderly Greek default was imminent. Renewed concern about the crisis has troubled markets this week.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)