Stocks went on a roller-coaster ride on Friday, ending with the Dow squeezing out a fifth consecutive week of gains, as investors digested the latest batch of mixed earnings ahead of a busy economic calendar next week.
The Dow Jones Industrial Average ended the day just 3 points ahead, after plunging nearly 150 points during the session. The S&P 500 and the Nasdaq eked out small gains also. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, finished below 13.
Among key S&P sectors, materials lagged, while health care rebounded.
"The market's had a good run near the highs and with earnings season about halfway through, we characterize the results so far as being lackluster to just OK," said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. "As the year progresses, we're expecting the economy to start coming out of some of the doldrums from the fiscal impediments from earlier in the year—so we're expecting a better second half and that should help support the market and provide us with the basis to have prices move forward."
(Read more: S&P 500 ready for another pullback?)
On the economic front, consumer sentiment rose to its highest level in six years, with the Thomson Reuters/University of Michigan's final reading on the overall index climbing to 85.1 in July from 84.1 in June. Economists surveyed by Reuters expected a reading of 84.
"This high level of confidence points toward a continued expansion of consumer spending in the year ahead," survey director Richard Curtin said in a statement.
But investors initially shrugged off the positive report, with the Dow plunging nearly 150 points soon after the report. Investors also hesitated to jump in ahead of next week's Federal Reserve's meeting and the widely-followed non-farm payrolls report.
"With the Fed meeting and non-farm payrolls due next week, there will be plenty of news to move the market in the week ahead," said Rebecca O'Keeffe, head of investment at Interactive Investor. "U.S. data has been more mixed in recent weeks, suggesting that next Friday's employment report may not be as good as recent months, in part because the housing market does look to have softened in light of higher interest rates."
Meanwhile, President Obama will not announce a decision about who will lead the Federal Reserve until the fall, according to a White House official. Current Chairman Ben Bernanke's term expires next January.
(Read more: Changes to Fed 'forward guidance' could lead to this)
Among earnings, Amazon.com declined after the Internet retail giant reported an unexpected loss and issued a cautious current-quarter forecast as it continues to invest in new areas like cloud computing services.
Starbucks rose after the coffeehouse chain topped earnings expectations and also forecast current-quarter profit above Street consensus. The company also boosted its full-year guidance as its new menu offerings helped drive customer traffic.
More than 50 percent of S&P 500 companies have reported results so far this quarter, with 68 percent of firms topping earnings expectations and 56 percent beating revenue estimates, according to data from Thomson Reuters. If all remaining companies report earnings in line with estimates, earnings will be up 4.1 percent from last year's second quarter.
Activision Blizzard surged after the videogame publisher said it will buy back nearly $8.2 billion worth of Vivendi's holding in the company.
Japan's Nikkei tumbled to its lowest level in nearly three weeks, as the yen strengthened against the dollar, following an inflation report.
"They looked good with the headline number, but when you dig down and take energy out, they were deflationary again," said Art Cashin, director of floor operations at UBS Financial Services. "That spooked the Japanese market and the yen spiked against the dollar."
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