Stocks rose on Friday following two multibillion-dollar acquisitions, but the Dow and S&P closed the week slightly lower following seven straight weeks of gains.
"People were using the recent weakness as a buying opportunity, but you can't read too much into today," said Charles Rotblut, market analyst at Zacks.com. "If we do get through this little line of resistance that we've hit this week, it's possible we'll trade higher."
"Next week we're going to have a lot of economic data, and that will be more telling as to the short-term reaction of the market," he added.
The Dow Jones Industrial Average and the S&P 500 rose about 0.5% on Friday while the Nasdaq Composite gained 0.80%.
"There's a little caution in the marketplace," said Bill Nichols, director of trading at Bear Stearns. "You've come a long way in a short time, so you can expect a little profit-taking over the next couple weeks."
The major markets saw lackluster trading over the week following mixed economic data, interest rate concerns and near-term profit-taking. The Dow posted a weekly decline of 0.4%, the S&P fell 0.5% and the Nasdaq dropped 0.1%.
"It's been a quiet week and not too surprising given the gains seen this month and this year," said Bryan Piskorowski, market analyst at Wachovia Securities. "It's going to take some backing and filling for a little while in the market before we see it push on."
Investors were encouraged on Friday by a pair of corporate acquisitions. Beverage giant Coca-Cola agreed to buy Vitaminwater maker Glaceau in a cash deal valued at $4.1 billion. The transaction is expected to boost Coke's earnings per share in the first full year following completion of the acquisition.
The Nasdaq Stock Market said it will buy Sweden's OMX AB in a cash and share worth $3.7 billion.
The deal is the second transatlantic stock exchange merger following NYSE's takeover of Paris-based Euronext, announced earlier this year, and allows the Nasdaq to branch out into Europe. OMX runs exchanges in seven Nordic countries.
On the economic front, existing home sales fell in April by 2.6% to 5.99 million units, the National Association of Realtors said. Analysts predicted monthly sales of 6.13 million units.
"I think the housing numbers are a bit of a wash between yesterday and today," said Marc Pado, chief market strategist at Cantor Fitzgerald. "Today's statement indicated housing seemed to be bottoming, and that's sort of the critical point. Also, a weaker housing number means interest rates aren't going to skyrocket."
Homebuilding stocks traded mixed on the news as investors were somewhat disappointed that Friday's housing data was weaker than Thursday's data, which showed the biggest surge in new home sales in 14 years.
"We're getting better economic data, and that's good for earnings," said Alec Young, equity strategist at S&P Equity Research. "Growth is good for corporate America as long as it's not coupled with inflation ... we think it's a good thing for stocks. It keeps the Fed on hold and keeps them from tightening."
Treasury prices this morning edged lower ahead of the NAR housing report, but pared losses following the report.
New York light sweet crude futures rose 1.6% on the New York Mercantile Exchange as low gasoline supplies concerned traders ahead of a traffic-heavy holiday weekend. Crude oil prices ended a volatile week with a decline of 1.2%.
European Stocks Drift Higher, Asia Declines
European stock markets drifted higher before the long weekend but Asian equities closed lower following the region's recent run.
The London FTSE-100 ended just above the flatline. Metal mining companies traded higher on merger speculation. Rio Tinto shares rose more than 4% on Friday.
In Paris, the CAC-40 was modestly higher. Shares of French energy operator EDF fell, as CEO Pierre Gadonneix announced to shareholders that the company is ready for a further asset sale.
Swiss bank UBS announced it expects a $1.71 billion gain from the sale its stake in Julius Baer. The world's fifth-largest bank plans to either sell the stock to a single buyer or on the open market.
The Frankfurt DAX pulled into positive territory from earlier losses.
Tokyo's Nikkei 225 Average fell broadly, closing over 1% lower as investors, concerned about recent falls in commodity prices, and Chinese and U.S. stocks, grabbed profits in property shares and other recent gainers such as Canon. Insurers were also hit by weak earnings and negative comments from some analysts over prospects for the current year. But Fujitsu jumped on its share buyback plan, becoming the best performing Nikkei 225 component.
South Korea's Kospi Index ended a touch lower, retreating from record levels, as recent outperformers such as Posco tumbled on worries that a rally in global markets would come to a halt.
Hong Kong stocks fell to a two-week low but Lenovo Group jumped as much as 16% after it posted forecast-beating earnings.
The Shanghai Composite Index rose to an all-time high as brokers surged on the belief that heavy turnover would boost their profits.