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Stocks Struggle for Direction; BBY Soars 12%

Stocks struggled for direction Friday, as investors took a breather after the S&P 500 hit a five-year closing high, despite quarterly results from financial giant Wells Fargo that edged past expectations.

"The bulls really need a breakout here," said Art Cashin, director of floor operations at UBS Financial Services. "They achieved a nominal new high, but we're consolidating those gains. You've got to make a credible run toward 1,500 [on the S&P 500] and that itself may stampede some money from the sidelines."

The Dow Jones Industrial Average toggled in and out of positive territory, after logging a gain for the second session. Boeing led the blue-chip laggards, while Chevron gained. 

The S&P 500 and the Nasdaq pared their early losses. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded above 13.

Among key S&P sectors, financials and materials led the laggards, while consumer staples held small gains. 

Wall Street got its first look at big bank earnings, with Wells Fargo posting a quarterly profit of 91 cents a share, two cents ahead of estimates. Revenue of $21.9 billion was about in line with expectations. However, traders reacted negatively to the report, sending shares lower. 

"Net interest margin is an ongoing problem for the banking industry," said John Fox, co-manager of the FAM Value Fund. "Low rates have good aspects and bad aspects—it's tough for financial institutions to earn a good return on equity. You're earning less on every dollar." 

Other large financials including JPMorgan, Goldman Sachs, Bank of America and Citigroup are scheduled to post results throughout next week. (Read More: Bank Earnings: What to Watch for) 

On the economic front, import prices slipped 0.1 percent in December, according to the Labor Department. And the trade deficit unexpectedly increased 16 percent in November to $48.7 billion, according to the Commerce Department. Economists polled by Reuters expected the deficit to decline to $41.3 billion.

The FAA is expected to launch a safety review of Boeing's 787 Dreamliner following a series of issues with the aircraft in the last week. Most recently, Boeing's 787 suffered a cracked cockpit window and an oil leak on separate flights in Japan.

Chevron edged higher after the oil giant said it expects fourth-quarter earnings to be "notably higher" than the previous quarter as oil and gas output rebounded. 

Best Buy jumped to lead the S&P 500 gainers after the consumer electronics retailer posted flat same-store sales during the holiday season. Still, the company lowered its expectations for free cash flow after it had to pay for some inventory earlier than expected.

Yum Brands remained under pressure as the company amid investigations into the company's food supply and expected weak sales in China. Bernstein cut its price target for the company from $85 to $80, and shares were off more than 1 percent in premarket trading.

Retailer JCPenney tumbled amid concerns about its turnaround plans. UBS downgraded the company to a "sell."

Also on the economic front, the Treasury Department's monthly budget for December will be issued at 2 pm ET. 

The Japanese Nikkei hit 23-month highs on Friday after Japan's cabinet approved its biggest spending boost since the start of the financial crisis.

By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Fed's Williams speaks, Bernanke speaks, Detroit Auto Show
TUESDAY: PPI, retail sales, Empire state mfg survey, business inventories, Fed's Plosser speaks, credit card default rates reported, Facebook event; Earnings from Lennar
WEDNESDAY: Weekly mortgage applications, CPI, Treasury int'l capital, industrial production, housing market index, oil inventories, Beige Book, Fed's Fisher speaks, OPEC's monthly market report; Earnings from Goldman Sachs, JPMorgan, Bank of NY Mellon, Ebay
THURSDAY: Housing starts, jobless claims, Philadelphia Fed survey, natural gas inventories, Fed balance sheet, money supply; Earnings from Bank of America, Citigroup, UnitedHealth, BB&T, BlackRock, American Express, Intel, Capital One
FRIDAY: General Electric, Schlumberger, Morgan Stanley