Stocks finished flat after hugging the flatline for most of the session in lackluster trading Thursday, as disappointing economic data from the euro zone overshadowed optimism over an upbeat jobless claims report and a flurry of M&A announcements.
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The Dow Jones Industrial Average slipped 9.52 points, to end at 13,973.39, dragged by Coca-Cola and Wal-Mart. Alcoa and JPMorgan led the blue-chip gainers.
The S&P 500 added 1.05 points, to finish at 1,521.38. The Nasdaq eked out a gain of 1.78 points,to close at 3,198.66. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, ended below 13.
Among key S&P sectors, telecoms closed lower, while energy gained.
"Technically, the market still does look strong," said Todd Salamone, director of research at Schaeffer's Investment Research, noting the S&P 500's recent five-year high in addition to the Russell 2000 and the S&P Midcap's all-time highs. "But these consolidations are nothing new: you give me two pieces of good news and I can give you two pieces of bad news—jobless claims and M&A deals are the positives, while worries in Europe and VIX options expiring during expiration week are the negatives."
Salamone said whenever VIX options expire during an expiration week, the S&P 500 tends to see an average downside of about 0.53 percent in the latter half of the week. But during regular expiration weeks, the S&P averages a gain of 0.25 percent and is positive 62 percent of the time.
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H.J. Heinz soared more than 20 percent following an announcement that the maker of ketchup and other food products will be purchased by Warren Buffett's Berkshire Hathaway and 3G. The deal will be worth $72.50 a share, or $28 billion. Other packaged-goods companies were also trading higher in the wake of the announcement, including General Mills, Kellogg and Kraft Foods. (Read More: Cramer: This Is the 'Year of the Deal')
American Airlines and US Airways announced they will merge to form the largest airline in the world in a deal valued at $11 billion. Doug Parker, CEO of US Airways, who will become CEO of the new American. The deal comes after several turbulent years marked by bankruptcy protection filings and consolidation in the U.S. airline industry. (Read More: What Travelers Can Expect With American-US AirwaysDeal)
Also on the M&A front, Anheuser-Busch InBev said it had now agreed to sell Mexican brewer Grupo Modelo's Piedras Niegras brewery to Constellation Brands and grant it perpetual rights for Corona and other Modelo brands in the United States, in a deal valued at nearly $2.9 billion. Constellation Brands skyrocketed nearly 40 percent to lead the S&P 500 gainers.
Meanwhile, European shares were in the red across the board following a report that showed the euro zone fell deeper into recession, with GDP contracting 0.6 percent in the final quarter of 2012, as exports from leading economies Germany and France tumbled. The drop was the biggest since the first quarter of 2009. For the year, GDP fell by 0.5 percent.
And Japan's GDP shrank 0.1 percent in the fourth quarter, disappointing expectations of a modest return to growth.
Among earnings, PepsiCo gained after the beverage giant topped analyst estimates due to higher prices for products and strong sales in Latin America.
General Motors declined after the automaker posted earnings short of analyst expectations as the company said weak European sales hit the company's bottom line.
Rio Tinto slid after the metals and mining group posted a loss for 2012, New CEO Sam Walsh vowed to slash costs and invest capital more carefully in 2013.
Carnival declined after the cruise operator warned that its latest mishap near the Mexican coast will reduce its earnings and canceled a dozen more cruises aboard the ship. Additionally, Goldman Sachs lowered it 2013 earnings estimate on the firm to $2.24 a share from $2.32 a share.
CBS and GoldCorp are expected to post earnings after the closing bell.
To date, 77 percent of S&P 500 companies have posted quarterly results this quarter, with 70 percent of firms topping earnings expectations, while 67 percent have exceeded revenue forecasts, according to Thomson Reuters. Earnings growth is above 5.5 percent for the first time this quarter. If all remaining companies report earnings that match estimates, earnings will be up 5.6 percent from last year's fourth quarter.
On the economic front, jobless claims dropped 27,000 to a seasonally adjusted 341,000 last week, according to the Labor Department. Economists polled by Reuters had expected claims to fall to 360,000.
Treasury prices added to gains after the government auctioned $16 billion in 30-year bonds at a high yield of 3.180 percent. The bid-to-cover ratio was 2.74.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
FRIDAY: Empire state mfg survey, Treasury int'l capital, industrial production, Fed's Pianalto speaks, consumer sentiment, e-commerce retail sales, credit card default rates reported; Earnings from Campbell
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