(Read More: Fed Officials Divided on Future of QE)
Minutes from the Fed's meeting in January, released on Wednesday, showed policymakers were growing concerned about the impact of quantitative easing, suggesting the Fed may taper off its $85 billion per month purchases earlier than forecast.
"We overreacted to the Fed news in the last two days, though a healthy correction between 2 and 5 percent would be what investors would want to get back into the market," said Art Hogan, managing director at Lazard Capital Markets, on Thursday.
(Read More: Don't Exit Market Due to Fed: Brown)
Paul Dales, U.S. economist at independent research firm Capital Economics, said Thursday's soft CPI (consumer price index) data indicated the Fed's asset purchases weren't stoking inflation.
"Consumer prices were flat last month… largely due to a 3.2 percent month-on-month fall in gasoline prices, more than offsetting a 0.4 percent rise in electricity and gas prices," wrote Dales in a note. "The rise in gasoline prices seen this month will boost the overall CPI by at least 0.4 percent in February, but that would still leave headline inflation below the Fed's 2 percent target."
Among earnings, Abercrombie & Fitch posted earnings that easily beat expectations, while revenue fell slightly short of estimates and the company handed in full-year 2013 earnings guidance that missed expectations. Meanwhile, the firm increased its quarterly dividend to 20 cents a share from 17.5 cents a share.
Hewlett-Packard rallied after the computer hardware giant easily topped Wall Street expectations and handed in current-quarter and full-year earnings guidance that topped forecasts. At least three brokerages lifted their price target on the company.
In Europe, investors remained cautious ahead of Italy's general election this weekend, although Milan's FTSE MIB was up 0.85 percent, after falling 2.9 percent on Thursday.
Germany reported fourth-quarter gross domestic product declined 0.6 percent, in line with the flash estimate, on Friday. However,Germany's Ifo business climate index posted its biggest monthly gain since July 2010 in February, suggesting the country is rebounding after its weak fourth quarter.
U.S. President Barack Obama will meet with Japanese Prime Minister Shinzo Abe in Washington on Friday. Abe is expected to seek support for the hyper-easy monetary policies he has instigated to revive Japan's ailing economy.