"There is some fear the commodities complex is selling off because of a global economic slowdown," said Art Hogan, chief market strategist at Jefferies & Co. "But for now, we'll continue to celebrate cheaper oil and the stronger dollar."
After an early climb of nearly 100 points, the Dow Jones Industrial Average ended up 43.97 points to 11,659.90. The blue-chip index finished with a weekly loss of 0.6%.
Of the Dow's 30 components, 22 finished with gains, led by Procter & Gamble Co. , up 2.7%.
Chevron Corp. fronted declines among the blue chips, with shares of the oil giant down 2%.
The S&P 500 climbed 5.27 points to close at 1,298.19, a level that leaves it virtually flat, or up 0.1% from a week ago.
Of the S&P's 10 industry groups, telecommunication services, financials and health care fronted sector gains.
Among the standouts in the telecom sector, Sprint Nextel Corp. rose for a second straight day, its shares up 5.9%. .
Energy stood out as the S&P's only declining sector, off 1.7%.
The Nasdaq Composite fell 1.15 points to end at 2,452.52, giving the tech-laden index a weekly rise of 1.6%.
On the New York Mercantile Exchange, oil for September delivery closed at $113.77 a barrel, down $1.24, or 1.1%, for the session. It lost 1.2% for the week. .
Metals futures were also pounded, with gold for December delivery falling $22.40 to close at $792.10 an ounce, a weekly loss of 8.4%. Silver futures for September delivery fell 9.9% to end at $12.815 an ounce. .
The dollar's rally extended to multiple-month highs, with the dollar index , which measures the greenback against a basket of currencies, climbing to an intraday high of 77.25, its highest level since December.
Treasury prices climbed, sending yields sharply lower, with the yield on the benchmark 10-year note falling 4 basis points to 3.851%. .
More than 1.1 billion shares traded on the New York Stock Exchange, with declining stocks edging just ahead of those advancing. On the Nasdaq, 771 million shares traded, and decliners ran ahead of advancing issues by 4 to 3.
Shares of J.C. Penney Co. gained 8.4% in the wake of the retailer's second-quarter results, which had profits falling 36%. .
"To a certain extent, we can't live on 'oil goes down/stocks go up' for the rest of our lives," said Hogan. "Some of the equities valuations have to do with earnings, with retailers during the last two days offering a mixed bag."
Shares of Ambac Financial and MBIA gained after Standard & Poor's Ratings Services late Thursday affirmed AA financial-strength ratings for both bond insurers. .
Not all financial shares gained, with Wachovia Corp. among those under pressure.
Shares of the Charlotte, N.C.-based bank fell 1.5% after state and federal regulators said Wachovia had agreement to a preliminary settlement under which the regional bank would offer to buy as much as $9 billion of auction-rate securities. .
In other corporate news, Waste Management Inc. said it would review its options after Republic Services Inc.'s board of directors rejected its sweetened takeover offer. Republic previously announced that it would seek to acquire Allied Waste Industries Inc. .
Early economic data mostly offered support for equities' early climb. The New York Federal Reserve Bank reported that a measure of manufacturing activity in the state improved slightly in early August, while the Federal Reserve said U.S. factory output climbed 0.4% in July.
Less positive was the University of Michigan's index of consumer sentiment, which climbed slightly in August to 61.7.
"e expect the further drop in energy prices in early August to further boost sentiment, though sentiment remains at weak 'recessionary' levels that are at odds with continued modest growth in the economy," said analysts at Action Economics.
Chicago Federal Reserve President Charles Evans offered his take on the economy, telling an audience in Bloomington, Ill., that slow economic growth and elevated inflation would likely continue until 2010. .
Overseas, the Nikkei 225 ended 0.5% higher in Tokyo. The FTSE 100 closed 0.8% lower in London after initial gains.
On Thursday, U.S. stock indexes closed higher, snapping a two-day losing run as investors looked beyond a larger-than-expected rise in consumer prices in July to focus on crude's recent decline.
By Kate Gibson