U.S. stocks climbed on Friday, but closed lower for the week, as investors weighed quarterly results from Wells Fargo and readied for a slew earnings ahead.
Expectations for the second-quarter earnings season have "picked up more than I might have thought in recent weeks, and that certainly increases the risk," said Bruce McCain, chief investment strategist at key Private Bank.
For the first quarter, investors "dismissed any bad news because of the severe weather. The flip side is now there are expectations for the economy and earnings to deliver, so we'll have to see. With valuations as high as they are, a lot of it hinges on whether the economy and earnings can live up to expectations," said McCain.
Lorillard rose and Reynolds American fell after the tobacco companies confirmed merger talks; Fastenal dropped after the industrial supplier reported revenue short of estimates and Gap also declined after the retailer's same-store sales fell in June.
Shares of Wells Fargo slipped after the nation's largest mortgage lender reported revenue just above estimates.
Read MoreWells Fargo reports slight profit rise, says economy is improving
"Sometimes the market takes a wait-and-see attitude ahead of earnings, and we have an avalanche kicking in next week," Art Hogan, chief market strategist at Wunderlich Securities, said of Friday's muted trading action.