Stocks climb; Dow closes above 15,000; MSFT, FB lead Nasdaq

Stocks advanced on Friday as a sharp drop in new home sales added to the uncertainty about when the Federal Reserve may begin to reduce its monthly bond purchases.

Microsoft shares surged, giving the tech sector a boost, after the company said CEO Steve Ballmer will retire within 12 months. Facebook, meanwhile, climbed 5 percent to close above $40.

S&P 500

The Dow Jones Industrial Average climbed, helped by a 7 percent surge in Microsoft and 1 percent gains in Verizon and AT&T shares. Travelers and Cisco were among the laggards.

The S&P 500 and the Nasdaq also posted gains. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell to near 14.

Among S&P sectors, telcos and materials paced the advance while financials and consumer discretionary underperformed.

For the week the Dow fell 0.5 percent, the S&P gained 0.5 percent and the Nasdaq added 1.5 percent.

As markets try to position for the September Fed meeting and some other events expected this fall, Rosenblatt Securities' Gordon Charlop said there could be a little more downside. "I'm not seeing the same kind of aggressiveness from buyers" looking to get in on the dips, he said. And that could mean markets continue this sideways trend.

A day after the 3-hour Nasdaq trading halt, Nasdaq OMX Group CEO Robert Greifeld told CNBC that the exchange has fixed the technical issues, but could not guarantee there would be no future problems.

Focus on Jackson Hole

Markets still have no greater clarity on when the Federal Reserve may begin to curtail its $85 billion in monthly bond purchases following Friday's economic data. Sales of new single-family homes fell 13.4 percent to a 394,000 annual rate in July, their lowest level in nine months.

"We've had a strong run in housing like we've had in the stock market and some correction was inevitable in the face of the spike in mortgage rates," Dan Greenhaus of BTIG said.

Home builder stocks slumped after the data.

On Thursday, global manufacturing data painted a more encouraging picture of the world economy.

With the data mixed, Fed officials speaking with CNBC from the annual central bank conference in Jackson Hole, Wyo. also offered few clues as to what the Fed may do at its September meeting.

James Bullard of the St. Louis Fed, meanwhile, told CNBC the central bank should take its time. "Inflation is running low, you've got mixed data on the economy, so I'd be cautious and I wouldn't want to pre-judge the meeting," he said.

Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams told CNBC that the Fed's actions will depend on the incoming economic data. "Any tapering I think we would do would be in gradual steps over time," Williams said.

(Read more: Fed's Lockhart: I could get comfortable with a move in September of some kind)

Retail earnings mixed

Turning to earnings reports, Pandora Media shares tumbled after the company warned that earnings for fiscal 2014 would fall below analyst estimates as expenses to buy music rights and expand its sales personnel rise.

Retailers were also in focus again with Gap, Ann, Foot Locker and Aeropostale providing a mixed picture of the American consumer.

In financials, Moody's Investors Service warned it might cut the credit ratings of the six biggest U.S. banks — including Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — saying the government may be unlikely to bail them out should they face trouble in the future.

By CNBC's Justin Menza. Follow him on Twitter @JustinMenza.