Stocks finished modestly higher in light-volume trading Friday, with the Nasdaq closing at its best level since November 2000, but gains were limited as investors hesitated to jump in amid a lack of strong catalysts to further fuel the recent rally.
Despite the day's rally, the Dow failed to finish above the widely-watched 14,000 level and also closed lower for the week, snapping five-weeks of consecutive gains.
U.S. Major Index Performance
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The Dow Jones Industrial Average gained 48.92 points, or 0.35 percent, to end at 13,992.97, led by Hewlett-Packard and United Health.
The climbed 8.54 points, or 0.57 percent, to close at 1,517.93. The Nasdaq rallied 28.74 points, or 0.91 percent, to finish at 3,193.87.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell to end near 13.
For the week, the Dow slipped 0.12 percent, the S&P 500 edged up 0.31 percent, and the Nasdaq advanced 0.46 percent. Pfizer was the biggest decliner on the Dow for the week, while UnitedHealth was the best performer.
Among the key S&P sectors, consumer staples was the best weekly performer, while telecoms slipped.
Meanwhile, snow started to fall around the Northeast at the start of what's predicted to be a massive snowstorm of "historic proportion," just a few months after the disruption caused by Superstorm Sandy. The New York Stock Exchange said it will be "business as usual" as the storm approaches.
(Read More: Are Power Companies Better Prepared for Nemo?)
Home generator maker Generac shares rallied to its highest level since its IPO in February 2010.
"The S&P got above 1,515 and it reached across 1,517 but didn't follow through," said Art Cashin, director of floor operations at UBS Financial Services. "Also, the volume's been light but it got even lighter after Europe closed. So perhaps a lot of this rally, with the storm inhibiting people in the northeast, has been coming out of Europe and maybe that's why we didn't see the follow through."
NYSE total volume is on track for its lowest day since December 25, or about 50 percent lower than the average volume this year of 3.4 billion.
(Read More: Stock Traders Want to Go Home!)
On the economic front, the U.S. trade deficit narrowed to its narrowest in three years, according to the Commerce Department, suggesting the U.S. government could upwardly revise its advance reading for fourth-quarter GDP, which showed the economy contracted at a 0.1 percent annual rate.
But wholesale inventories slipped in December to a seasonally adjusted $497.65 billion, according to the Commerce Department, the first decline since June.
China said its exports grew 25 percent in January from a year ago, the strongest showing since April 2011 and well ahead of market expectations for a 17 percent rise, while imports also beat forecasts, surging 28.8 percent on the year.
(Read More: Exactly How Skewed Is China's Trade Data?)
Meanwhile, German data showed a 2012 surplus that was the nation's second highest in more than 60 years.
CIT Grouprallied amid a report from Reuters that the bank holding company held preliminary talks over the past 18 months to sell itself to banks including Toronto-Dominion and Wells Fargo, though nothing came of the conversations. However, a CIT spokesman declined to comment.
McDonald's edged higher even after the fast-food giant said January same-store sales around the world dropped 1.9 percent, a steeper decline than analysts expected. McDonald's warned last month that sales would be lower.
Among earnings, LinkedIn surged after the social-networking website blew past earnings expectations and handed in current-quarter revenue guidance that exceeded Wall Street expectations.
Activision Blizzard soared after the videogame publisher topped earnings and revenue expectations and handed in current-quarter guidance that beat estimates.
Moody's topped earnings expectations and forecast strong 2013 earnings. But shares of the ratings agency slumped to lead the S&P 500 laggards on worries over a federal fraud lawsuit.
So far, almost 60 percent of S&P 500 companies have posted quarterly results, with 70 percent of firms topping earnings expectations and 66 percent exceeding revenue estimates, according to Thomson Reuters. If all remaining companies report earnings in line with estimates, earnings will be up 5.2 percent from the fourth quarter of last year.
In Europe, a two-day European Union (EU) summit continued in Brussels, the first since Prime Minister David Cameron confirmed Britain will hold a referendum on EU membership. Early on the day, EU leaders agreed to the framework for a new 960 billion euro ($1.3 trillion) budget, to be finalized later on Friday.
(Read More: )
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
On Tap Next Week:
MONDAY: Earnings from Lionsgate
TUESDAY: NFIB small business optimism index, Fed's George speaks, 3-yr note auction, Treasury budget, Fed's Plosser speaks, State of the Union; Earnings from Barclay's, Coca-Cola, Avon Products, McGraw-Hill, Michael Kors, Buffalo Wild Wings, Clearwire
WEDNESDAY: Weekly mortgage applications, retail sales, import & export prices, business inventories, oil inventories, Fed's Bullard speaks, 10-yr note auction; Earnings from Comcast, Deere, Dean Foods, Cisco, Applied Materials, MetLife
THURSDAY: Jobless claims, natural gas inventories, Fed's Bullard speaks, 30-yr bond auction, Fed balance sheet/money supply, 13-F filings; Earnings from General Motors, PepsiCo, Rio Tinto, CBS
FRIDAY: Empire state mfg survey, Treasury int'l capital, industrial production, Fed's Pianalto speaks, consumer sentiment, e-commerce retail sales, credit card default rates reported; Earnings from Campbell
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