Stocks pared their early gains to finish mixed Friday, but the Dow and S&P still ended higher for the week, propelled by some robust earnings and encouraging news from the euro zone.
"The U.S. economy is a bit stronger today than it was a year ago," said Bob Doll, chief equity strategist BlackRock on CNBC's "Squawk Box." "Questions about the U.S. economy or the European debt situation caused the market to stop going up, but I think we’ll resume the grind higher for the back part of this year.”
The Dow Jones Industrial Average gained 65.16, or 0.5 percent to finish at 13,029.49, led by Microsoft and Travelers , after flirting with the 13,000 milestone all week.
Bank of America led the blue-chip laggards, a day after the banking giant posted earnings that fell 68 percent from a year ago, but results still beat estimates. Analysts were mixed on the stock—CLSA's analyst Mike Mayo issued a "sell" rating on the stock, while KBW and Citigroup both raised their price target on the company.
The S&P 500 eked out a small gain of 1.21 points, or 0.12 percent, to close at 1,378.53. And the Nasdaq slipped 7.11 points, or 0.24 percent, to end at 3,000.45.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 18.
For the week, the Dow gained 1.40 percent, the S&P 500 added 0.60 percent, while the Nasdaq slipped 0.36 percent. Travelers was the biggest weekly advancer on the Dow, while BofA was the top laggard.
Most key S&P sectors finished the week in positive territory, led by utilities, but techs finished in the red for the second week in a row.
Stocks zigzagged for most of the week as investors sifted through several weaker-than-expected economic news, ongoing jitters from the euro zone and some robust earnings reports.
“It’s been a tug of war all week between dubious macro data and strong earnings,” said Lawrence Creatura, portfolio manager at Federated Investors. “And the European situation is like the weather—the further out you look, the harder it is to forecast.”
“Some deceleration in the macro data [this week] signaled fear that this quarter’ earnings strength wouldn’t be continuing,” explained Creatura. “Some people are suspicious that some of the strength in the first quarter was borrowed from future quarters because of the mild weather.”
Apple slumped more than 2 percent, trading below $580 a share. The stock is currently in correction territory, tumbling more than 10 percent from its all-time high of $644 earlier this month. (Read More: Once-Mighty Apple Stock Plunges Over 10% in 10 Days)
Among earnings, General Electric gained after the minority shareholder of NBCUniversal beat Wall Street expectations, thanks to strong sales of jet engines and energy equipment, in addition to profit growth at its finance arm.
Fellow Dow component McDonald's also rose after the fast-food giant posted quarterly results that met expectations.
Microsoft's quarterly results topped expectations after-the-bell Thursday. Some market pros said it might trigger a tech rally on Friday. At least four brokerages boosted their price target on the tech giant.
Honeywell reported earnings that beat analysts' expectations, and the industrial conglomerate also raised its full-year outlook, saying growth in U.S. and high-growth markets are more than offsetting softness in Europe.
Schlumberger rallied after the oilfield services firm reported a higher profit, helped by strong deepwater drilling demand.
Meanwhile, SanDisk tumbled to lead the S&P 500 laggards after the chipmaker said its memory chip glut will continue to affect prices for the rest of the year. At least 10 brokerages lowered their price target on the firm. Rivals Micron and Broadcom also declined.
Riverbed Technologies plunged more than 25 percent after the networking hardware company posted lower-than-expected revenue and handed in a dismal quarterly outlook as the firm expects delays in product upgrades to hurt sales. At least seven brokerages slashed their price target on the company.
Tempur-Pedic shares were also hammered after the mattress maker handed in a disappointing full-year forecast.
Still, of the 121 S&P 500 components that have posted earnings so far, 81 percent have surpassed expectations, according to Thomson Reuters.
European shares closed higherfollowing a report that showed German business sentiment rose unexpectedly for the sixth month in a row, an encouraging sign that the region's largest economy continues to outpace its neighboring countries.
Meanwhile, yields on Spanish 10-year bonds rose again above the market-sensitive level of 6 percent and German Bunds rallied.
French voters will head to the polls this Sunday in the first round of the presidential election process. Current President Nicolas Sarkozy is trailing behind Socialist challenger Francois Hollande. The second and final round will be held on May 6.
“Sarkozy’s opponent has made promises that seem to fit around most of the austerity plan," said Art Cashin, director of floor operations at UBS Financial Services on CNBC’s “Squawk on the Street.” "[But] further down the line, we’ll have elections in Greece too so the electoral circuit over here is important but the one in Europe is too."
US Airways declined after the airline said it has reached tentative labor deal with three American Airlines unions for support of a possible merger.
Meanwhile, a new insider trading investigation is underway involving a current employee of Goldman Sachs—an investigation that could complicate the prosecution of former Goldman board member Rajat Gupta.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
On Tap Next Week:
MONDAY: GM to restart Volt production; Earnings from ConocoPhillips, DR Horton, Hasbro, Xerox, Netflix, Texas Instruments
TUESDAY: S&P Case-Shiller home price index, new home sales, consumer confidence, FHFA home price index, 2-yr note auction, FOMC meeting begins, IBM shareholders meeting, Wells Fargo shareholders meeting; Earnings from AT&T, 3M, Unite Tech, US Steel, Amgen, Apple, Baide, Aflac
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, FOMC meeting announcement, 5-yr note auction, Bernanke press conference, Coca-Cola shareholders meeting, GE Shareholders meeting, Hudson City shareholders meeting, USDA food prices outlook; Earnings from Boeing, Caterpillar, Eli Lilly, GlaxoSmithKline, AutoNation, Delta, Credit Suisse, Motorola Solution, Sprint, Akamai
THURSDAY: Jobless claims, Chicago Fed nat'l index, pending home sales index, 7-yr note auction, J&J shareholders meeting; Earnings from AstraZeneca, Bristol-Myers Squibb, Chrysler, ExxonMobil, PepsiCo, Royal Dutch Shell, Barclays, Pulte, Amazon.com, Starbucks, Zynga
FRIDAY: GDP, employment cost index, consumer sentiment; Earnings froM Chevron, Merck, P&G
More From CNBC.com: