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Stocks halt 2-day losing streak; Dow, S&P lower for week

Stocks staged a final-hour comeback to close in positive territory in choppy trading, putting an end to two days of sharp declines, but the Dow and S&P 500 still ended lower for the week.

Read MoreJim Cramer: Don't try and outrun the bear

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The Dow Jones Industrial Average rose 44.50 points to finish at 16,491.31.

The S&P 500 gained 7.01 points to end at 1,877.86. And the Nasdaq added 21.30 points to close at 4,090.59.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid below 13.

Among key S&P sectors, telecoms and consumer discretionary led the gainers.

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"We're likely to see a continuation in volatility and price action, though the longer-term charts seem to say that the overall trend is still up," said Joe Bell, senior equity analyst at Schaeffer's Investment Research. "Compared to the previous pullbacks, volume has also been extremely light, which is a concern. Usually, you want to see the selling climax, but in this case, this perhaps means that people haven't been extremely fearful."

Housing starts jumped 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, according to the Commerce Department. The reading was the best since November 2013. And building permits hit their highest level since 2008.

Read MoreHousing startssurge, yes, but not why you think

Meanwhile, consumer sentiment slipped to 81.8 in May, according to the Thomson Reuters/University of Michigan's preliminary reading. The reading was down from 84.1 from the month before and was also below the expectation of 84.5 among economists polled by Reuters.

St. Louis Federal Reserve President James Bullard said he sees inflation picking up in the near future and approach the central bank's 2-percent target. He added that he considers the neutral Fed funds rate to be 4 percent, factoring in 2-percent inflation.

No major earnings are expected Friday.

General Motors said it has entered into a consent decree with the U.S. government over its ongoing ignition switch recall. The automaker will pay a $35 million fine. Since January, GM has recalled about 11.2 million cars and trucks.

Pfizer announced that it will submit a New Drug Application (NDA) for palbociclib with the FDA in the third quarter. Shares ticked higher after being temporarily halted.

JCPenney spiked nearly 15 percent after the retailer posted a smaller-than-expected quarterly loss and topped revenue expectations. At least six brokerages raised their price targets on JCPenney.

Nordstrom surged more than 10 percent to lead the S&P 500 gainers after the department store chain beat earnings expectations and said it would seek a partner for its credit card receivables, currently totaling about $2 billion.

So far, 93 percent of S&P 500 companies have posted quarterly results, with 69 percent of firms topping earnings expectations and 22 percent missing estimates.

Darden Restaurants slipped after the restaurant chain agreed to sell its struggling Red Lobster chain to Golden Gate Capital for $2.1 billion in cash.

Verizon rose a day after Warren Buffett's Berkshire Hathaway unveiled a new stake of 11 million shares in the company in a regulatory filing. The filings also showed that prominent hedge fund managers cut their exposure to high-profile Internet names likeNetflix in the quarter.

On Thursday, major averages tumbled for a second session on the day, with the Dow Jones down triple digits. Small-cap stocks weighed, as the Russell 2000 briefly hit correction territory before pulling back. The 10-year Treasury yield broke below the psychologically important 2.50 percent mark on Thursday for the first time since last October.

Read MoreI have 'sickfeeling' 25% crash is ahead: Acampora

—By CNBC's JeeYeon Park

Coming up next week:

Monday: Fed's Fisher speaks, Cisco investor day; Earnings from Campbell Soup, Urban Outfitters
TUESDAY: Fed's Plosser speaks, Fed's Dudley speaks, Microsoft Surface event; Earnings from Home Depot, Dick's Sporting Goods, Staples, TJX
WEDNESDAY: Mortgage applications, Fed's Dudley speaks, Fed's Yellen speaks, oil inventories, Fed's George speaks, Fed's Kocherlakota speaks, FOMC minutes, Boeing investor conference; Earnings from Lowe's, Target, Hormel, PetSmart, Tiffany, American Eagle Outfitters, L Brands, NetApp, Williams-Sonoma
THURSDAY: Jobless claims, Chicago Fed nat'l activity index, PMI mfg index flash, existing home sales, leading indicators, Kansas City Fed mfg index, Fed's Williams speaks, Facebook annual mtg, Intel shareholder mtg; Earnings from Best Buy, Dollar Tree, Hewlett-Packard, Gap, Marvel Tech, Ross Stores, Aeropostale, Gamestop, TiVo
FRIDAY: New home sales; Earnings from Foot Locker

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