Stocks Halt 2-Day Selloff, but Log Worst Weekly Drop Since Mid-April

Stocks finished mixed in volatile trading Friday, with major averages putting an end to two days of heavy losses triggered by Fed Chairman Ben Bernanke's comments that the central bank may scale back its asset purchases later this year.

Still, stocks finished in the red for the week, logging their worst weekly drop since mid-April.

(Read More: Bulls and Bears Face Off on Market's Next Move)

"The Fed and policies in other countries should continue to drive market volatility in the near term," according to strategists at Wells Fargo Advisors. "Economic conditions are improving and the outlook for the U.S. economy remains favorable…We continue to view pullbacks in equities as buying opportunities to accumulate stocks in cyclical sectors as valuations remain below the longer-term average."

U.S. Major Index Performance

Last 1 Week % Change MTD % Change QTD % Change
Dow 14,799.40 -1.80% -2.09% 1.51%
S&P 500 1592.43 -2.11% -2.35% 1.48%
NASDAQ 3357.25 -1.94% -2.85% 2.75%
Russell 2000 963.68 -1.80% -2.08% 1.28%
CBOE VIX 18.9 10.20% 15.95% 48.82%

The Dow Jones Industrial Average rose 41.08 points to close at 14,799.40, led by P&G and Coca-Cola, after plummeting more than 350 points in the previous session. The blue-chip index gyrated in a wide 170-point range.

The S&P 500 edged up 4.24 points to end at 1,592.43, while the Nasdaq slid 7.39 points to finish at 3,357.25.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, declined below 19.

For the week, the Dow fell 1.8 percent, the S&P 500 tumbled 2.11 percent, and the Nasdaq declined 1.94 percent. AT&T was the worst performing Dow component for the week, while Cisco climbed.

All key S&P sectors ended in the red for the week, dragged by utilities and telecoms.

Major averages have been on a rollercoaster ride all week amid anxiety over the Fed meeting. Stocks took a sharp nosedive Thursday, with the Dow and the S&P 500 posting their worst losses of 2013.

"There appears to be relative calm following a calamitous period since the Fed threatened to take away the steroids. In the grand scheme of things, stocks still look relatively cheap when compared to cash and government bonds, so investors will be on a bargain hunt following yesterday's battering," said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

(Read More: Stock Drop an Overreaction: Morgan Stanley CEO)

The benchmark 10-year Treasury notes fell, pushing their yield to a near two-year high of 2.516 percent. The Treasury is scheduled to auction $99 billion in new coupon-bearing notes, including $35 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.

"All the concern in the markets is because the Fed sees the economy stronger in the future," said widely-followed hedge fund manager David Tepper, founder of Appaloosa Management in a statement to CNBC. "In fact, their forecast shows that they will wait until a lower unemployment rate(closer to 6 percent than 6.5 than) to raise interest rates. So they are a bit easier on that front...I obviously thought they should start to taper. [But] the bottom line when the dust settles [is that the] only one place to be [is] STOCKS."

St. Louis Federal Reserve President James Bullard said the decision by the central bank to lay out its plans to taper its bond-buying program was badly timed and that the Fed should have waited for "more tangible signs" of economic improvement and a halt in the downward direction for inflation.

Asian shares stabilized Friday, led by a stellar rebound in Japan's benchmark Nikkei index, which crossed the 13,000 level to rally as much as 2 percent, notching up gains of over 4 percent on the week. Meanwhile, Europe shares closed at their lowest level since January.

There were no major economic reports released. But Friday marked quadruple witching, when index futures, options on index futures, single-stock futures and stock options expire.

Gogo tumbled in its trading debut on the Nasdaq after the inflight Wi-Fi provider priced its 11 million shares at $17 a share.

Oracle slumped to lead the S&P 500 laggards after the technology giant missed forecasts for software sales and subscriptions for the second straight quarter. Additionally, at least five brokerages lowered their price targets on the company.

Facebook gained after UBS raised its rating on the social-networking giant to "buy" from "neutral."

Plus, Sprint Nextel raised its buyout offer for Clearwire to $5 per share late on Thursday, and announced support from a key group of dissident shareholders, trumping rival suitor Dish Network.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Chicago Fed nat'l activity index, Dallas Fed mfg survey, Fed's Fisher speaks
TUESDAY: Durable goods orders, FHFA home price index, S&P/Case-Shiller index, new home sales, consumer confidence, Richmond Fed mfg index, 2-yr note auction, Sprint shareholder mtg, Yahoo shareholder mtg; Earnings from Carnival, Lennar, Walgreen, Barnes & Noble, Apollo Group
WEDNESDAY: Fed's Kocherlakota speaks, MBA mortgage applications, GDP, corporate profits, oil inventories, 5-yr note auction, Microsoft Build conf.; Earnings from General Mills, Monsanto, Bed Bath & Beyond
THURSDAY: Jobless claims, personal income & outlays, pending home sales, natural gas inventories, Fed's Powell speaks, Fed's Lockhart speaks, 7-yr note auction, farm prices, Fed balance sheet/money supply, Apple e-books decision day; Earnings from ConAgra, KBHome, Nike, Accenture
FRIDAY: Fed's Stein speaks, Fed's Lacker speaks, Chicago PMI, consumer sentiment, Fed's Pianalto speaks, Fed's Williams speaks, NewsCorp splits into 2 companies; Earnings from Blackberry

More From