A late wave of computerized sell programs linked to expiring options dragged down stock prices Friday.

The Dow Jones industrial index fell 13.96 points to close at 2,635.59. For the week, the blue chip index fell 12.91 points.

The Commerce Department reported early in the morning that the nation's trade deficit shrank to $7.17 billion in December, its lowest level in five years, but that news was offset by a report that industrial production fell sharply in January.

For most of the day, the stock market was slightly higher, but sell programs overwhelmed the frail advance in the last hour of trading.

Much of the selling was tied to the expiration of stock options and stock-index futures and options in what is known as a "double witching hour."

On the broader market, advancing shares outpaced declines, 761 to 727, on Big Board volume of 166.8 million shares, compared to 174.6 million Thursday.

Technology stocks slumped Friday, with Hewlett-Packard falling 3 3/8 to 43 7/8 after the firm reported disappointing first-quarter results.

Compaq fell 3 5/8 to 85 1/8 as several analysts cut earnings estimates after Compaq projected sluggish growth in the U.S. market. IBM fell 1/4 to 103 1/2 despite favorable reaction to high-powered workstations introduced Thursday.

Bolar Pharmaceutical tumbled 4 7/8 to 8 1/8 after the Securities and Exchange Commission filed a complaint against the troubled drug company.

Nordstrom dropped 3 1/4 to 29 1/2 on the over-the-counter market after the retailer said it expects earnings to fall in 1990.

Echo Bay Mines fell 2 1/4 to 16 5/8 after it told analysts that a previous estimate of recoverable gold was over-optimistic.

Agency Rent-A-Car jumped 2 1/4 to 12 in response to a published report that some investors believe the company may attract takeover interest.

Castle & Cooke rose 3 1/4 to 35 on the belief that the company's valuation would be enhanced by a spinoff of its Dole food unit.

BankWorcester gained 2 7/8 to 18 3/8 after it agreed to be acquired by Citizens Financial for $22.50 a share.

Stock prices closed mixed in moderate trading on the Tokyo Stock Exchange Friday, reflecting investors' worries over Sunday's general election. The blue chip Nikkei average of 225 selected issues, which soared 316.10 points Thursday, eased 11.67 points to close the week at 37,460.32.