NEW YORK (CNNMoney.com) - Stocks gripped the unchanged line Friday, with investors unwilling to either extend the recent rally or bail out ahead of a long holiday weekend.

U.S. financial markets are closed Monday in honor of the Martin Luther King Jr. Day holiday, and analysts said that reluctance to make big moves ahead of the three-day weekend also played a role in the market's struggle Friday.

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The Dow Jones industrial average (down 2.49 to 10,959.87, Charts) and the Nasdaq composite (up 0.35 to 2,317.04, Charts) both ended near unchanged.

The S&P 500 (up 1.55 to 1,287.61, Charts) index managed a few points.

For the week, the Dow and S&P closed barely higher, while the Nasdaq gained soundly.

Stocks rallied in the first part of 2006, with the Dow industrials and S&P 500 gaining for six out of seven sessions and hitting 4-1/2 year highs. The Nasdaq gained seven in a row and hit a nearly 5-year high.

However, such a run also set the market up for some consolidation, and that's what seemed to happen Thursday and Friday, particularly amid some earnings warnings and concerns about Iran's nuclear program.

However, in totality, the start of the year has been very good, said Donald Selkin, director of research at Joseph Stevens.

"After the first seven sessions of this year, the market had gained more than it did in all of 2005," Selkin said. "And even the declines we've seen the last two days have been nominal."

Year-to-date, the Dow is up 2.3 percent, S&P 500 is up 3.1 percent and the Nasdaq composite it up 5.1 percent.

The focus in the week ahead turns to earnings, with the first big wave of companies due to report, after the modest smattering in the last week.

Analysts are on average looking for profits to rise about 13 percent year-over-year. As long as the numbers are generally perceived as living up to or surpassing estimates, that should help stocks in the coming months, said Tom Schrader, managing director of U.S. equity trading at Legg Mason.

The first batch of earnings pre-announcements in January have been fairly negative, as is typical at the start of a new quarter. But the tone is expected to turn more positive in the weeks ahead, Schrader said.

Helping the market Friday was a mild inflation report and falling oil prices.

The producer price index (PPI) rose a bigger-than-expected 0.9 percent in December. However, the "core" PPI, which excludes volatile food and energy prices, increased by a smaller-than-expected 0.1 percent.

That was an encouraging sign for market participants betting on the Federal Reserve pausing or ending its 18-month rate-hiking campaign soon.

Treasury prices rose on the report, lowering the yield on the 10-year note to 4.35 percent from around 4.41 percent late Thursday. Bond yields and prices move in opposite directions.

In addition to PPI, a separate report showed December retail sales grew less than expected, both in terms of overall sales and sales excluding autos.

U.S. crude oil for February delivery slipped 9 cents to settle at $63.85 a barrel on the New York Stock Exchange, after having fallen more in the early going.

Among blue-chip decliners, General Motors (down $0.59 to $20.37, Research) lost 2.8 percent after saying that it expects North American sales to fall in 2006 as it works to cut costs and save about $4 billion. The stock slid earlier in the week amid ongoing worries that it may end up cutting its dividend.

IBM (down $0.40 to $83.17, Research) fell 0.5 percent after saying late Thursday that the Securities and Exchange Commission has upgraded its inquiry -- into how the company forecast stock option expenses in the first quarter of 2005 -- into a formal probe.

The influential chip sector was under pressure, with the Philadelphia Semiconductor (down 2.64 to 526.64, Charts) index, or the SOX, losing 0.5 percent.

Chipmaker Advanced Micro Devices (down $1.22 to $34.13, Research) slipped 3.5 percent after Deutsche Bank Securities downgraded it, due to concerns about more competition from Intel (down $0.18 to $25.79, Research).

SanDisk (down $4.39 to $72.83, Research) slipped 5.7 percent after Bear Stearns downgraded the flash memory maker, citing the stock's valuation heading into a slower time of year for the memory chip market.

Tyco International (down $3.19 to $27.12, Research) slumped 10.5 percent in very active New York Stock Exchange trade. The company cut its fiscal first-quarter profit outlook and detailed its previously announced breakup into three separate companies.

Lucent Technologies (down $0.06 to $2.65, Research) slipped after warning that 2006 revenue will miss forecasts and fiscal first-quarter revenue will fall short of the fourth quarter, due to weaker sales in the U.S. and China.

Rival Nortel Networks (down $0.15 to $3.22, Research) slipped too.

On the upside, oil stocks rallied, bouncing back after several down sessions. Dow component Exxon Mobil (up $1.33 to $60.97, Research) was among the stocks boosting the Amex Oil index (up 13.65 to 1,078.40, Charts).

In other news, Boston Scientific (up $0.15 to $25.20, Research) boosted its offer for medical device maker Guidant (up $0.44 to $70.84, Research) to $25.5 billion, outshining rival suitor Johnson & Johnson (down $0.39 to $61.82, Research)'s recently sweetened bid.

However, the 4 p.m. ET deadline Boston Scientific had given Guidant passed without a response from the company.

Market breadth was positive. Winners beat losers on the New York Stock Exchange six to five on volume of 1.56 billion shares. Advancers edged decliners eight to seven on the Nasdaq, where 1.76 billion shares changed hands.

The dollar fell versus the euro and yen.

COMEX gold for February delivery rose $7.70 to settle at $557 an ounce.