NEW YORK (CNN/Money) -
U.S. stocks closed out a quiet session Friday little changed and a tumultuous week with gains, as investors sorted through the week's conflicting news, emerging with some optimism that the economic recovery is still intact.
The Dow industrials (down 14.31 to 9644.82, Charts), the Nasdaq composite (down 3.85 to 1905.70, Charts), and the Standard & Poor's 500 (down 3.28 to 1036.30, Charts) index all closed just below unchanged Friday.
However, for the week, stocks closed higher. The Dow gained 1.8 percent, the S&P gained 1.7 percent, and the Nasdaq gained 2.7 percent.
Stocks meandered Friday in thin trade under the pull of profit-taking and the quadruple-witching effect. Friday was the last day of trade before the expiration of contracts for stock index futures, stock index options, individual stock futures and individual stock options, which added to the volatility, particularly near the start and close of trading.
But the day's stalling failed to undo the market's advances earlier in the week, with technology and other sectors gaining on some encouraging economic news and relief that the Federal Reserve hinted it will keep interest rates low for the foreseeable future.
"The main thing is the economic news looks like its steadily improving and that should continue to help stocks," said Timothy Ghriskey, president of Ghriskey Capital Partners.
Thursday's gains put the Dow and S&P 500 at new 15-month highs, and the Nasdaq at a new 18-month high. Friday's close left the indexes just shy of these heights.
No economic reports are due until Thursday, which brings weekly jobless claims, durable goods orders and new and existing home sales. Friday brings the final reading on second-quarter gross domestic product growth as well as the revised September consumer sentiment index from the University of Michigan.
Next week brings the first big wave of earnings reports, with major financial firms offering their results. If Bear Stearns' report Thursday was any indication, the sector should have pretty positive things to say, key to the continuation of the rally.
"The market needs to see strong financial-sector earnings next week," Ghriskey said. "While technology has been driving the rally recently, the financials need to participate for the broader market rally to continue."
Goldman Sachs (GS: up $0.48 to $93.73, Research, Estimates), Lehman Brothers (LEH: down $0.20 to $70.65, Research, Estimates) and Morgan Stanley (MWD: down $0.55 to $52.38, Research, Estimates) are all expected to report results before the open Tuesday, and all are expected to show solid gains from what they earned a year ago, according to earnings tracker First Call. Other companies of note due to report results next week include Scholastic (SCHL: down $0.40 to $30.80, Research, Estimates) after the close Tuesday and Micron (MU: up $0.36 to $14.53, Research, Estimates) after the close Wednesday. Both companies are expected to post losses that narrowed from a year earlier.
However, even if the earnings results are strong, the market is likely to see a short-term pullback.
"The concern is that we're very overbought right now," said Tom Schrader, head of listed trading at Legg Mason. Schrader says the market is due for a correction and that technology, which has been the rally's leader, is a clear choice for the first sector to pull back.
Friday's market
Among stocks moving the market Friday: shares of Linux software provider Red Hat (RHAT: up $1.48 to $9.88, Research, Estimates) rallied 17.6 percent in active Nasdaq trade one session after the company reported a second-quarter profit versus a year-earlier loss due to a growth in subscriptions.
Shares of Nike (NKE: up $4.25 to $61.50, Research, Estimates) surged 7.4 percent after it reported quarterly earnings late Thursday that were well above what analysts had expected and significantly higher than the year-earlier results.
Handheld computer maker Palm (PALM: down $1.52 to $21.05, Research, Estimates) lost 6.7 percent after reporting revenue growth that was worse than expected in its fiscal first quarter, even though its loss was smaller than predicted and the company said demand for its products was stronger.
Dow stock General Electric (GE: down $0.18 to $31.93, Research, Estimates) fell 0.5 percent after a few of its units -- including NBC and the commercial finance and aircraft engine segments -- warned that fiscal 2003 revenue would slip.
In non-earnings related news, shares of drug wholesaler AmerisourceBergen (ABC: down $1.82 to $54.83, Research, Estimates) lost 3.2 percent after a Wall Street Journal article alleged that the company is being probed for potentially illegal drug sales made to boost profits.
Market breadth was positive, with winners narrowly edging losers on the New York Stock Exchange, where 1.45 billion shares changed hands. On the Nasdaq, decliners edged advancers as 1.85 billion shares traded.
Treasury prices were barely changed. The yield on the 10-year note stood at 4.16 percent, unchanged from late Thursday. The dollar was weaker versus both the euro and the yen.
NYMEX light sweet crude oil futures fell 17 cents to settle at $27.07 a barrel. COMEX gold rallied $5.20 to settle at $382.90 an ounce.
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