Stocks ended a choppy trading week slightly higher as the Federal Reserve continued to eye inflation as its primary concern.
The Dow Jones Industrial Average ended the week up 0.1%, the S&P 500 ended flat while the Nasdaq Composite closed the week up 0.4%.
Stocks ended a volatile session in negative territory on Monday as investors were rattled by concerns regarding leveraged mortgage securities held by two hedge funds operated by Bear Stearns.
"We will see a splash near term as some of these funds need to unwind positions in paper that really isn't traded too much," said Jack Ablin, chief investment officer at Harris Private Bank. "There is going to be a couple of weeks of sloppy trading in that space."
Stocks had another bumpy day, closing with loss on Tuesday, as subprime mortgage concerns continued to color trading.
"The market is looking for direction and it seems like everyday recently, the market has been hit with developments it doesn't like," said Brian Hicks, president of Wealth Daily. "I think the market is looking for some light at the end of the tunnel and it looks like the housing problem will continue longer than expected."
Lennar the second largest U.S. homebuilder, reported a quarterly loss on Tuesday, citing charges related to land values and declining demand related to the subprime-mortgage meltdown.
Blackstone Group fell below its offering price of $31, fueling the day's bearish sentiment.
Stocks closed Wednesday higher, led by gains in technology and energy shares as well as a drop in Treasury bond yields.
Major indexes had fallen earlier in the day after weaker-than-expected durable goods data but then rebounded in the afternoon.
"I think a lot of people see setbacks to be bargain time", said Michael Metz, chief investment strategist at Oppenheimer. "When declines fail to gain traction, bargain hunters step in and buy, not seeing the market in trouble."
Software maker Oracle reported strong fiscal fourth-quarter results, which boosted tech stocks. Oracle posted a 17% rise in fourth-quarter software sales and gave a positive growth outlook for its current quarter.
Nike shares jumped 8% after reporting strong fourth-quarter earnings and better-than-expected future orders.
Stocks closed Thursday slightly lower as investors tried to figure out the Federal Reserve's latest statement on inflation and interest rates.
The Fed left the federal funds rate unchanged at 5.25% and said core inflation has "improved modestly." But policymakers also said that their main concern was that inflation might fail to moderate.
"The Fed statement has left enough uncertainty in the markets as it remains data dependent," said PIMCO's Bill Gross.
General Motors was the biggest percentage gainer on the Dow after the automata reached a deal to sell its Allison Transmission unit for $5.6 billion to private equity firms Carlyle Group and Onex.
Stocks ended slightly lower on Friday as tech stocks gained on news of a stock split announced by Blackberry handheld device maker Research In Motion.
"The last session of any quarter is full of a lot of trading noise, it's a very thin market with next week being a semi-holiday week," said Michael Metz, chief investment strategist at Oppenheimer.
Micron gained despite posting a quarterly loss. The memory chip maker attributed the shortfall to severe price declines across most memory products.