Stocks Cap Down Week With Mixed Finish

On the macro front, the University of Michigan consumer sentiment index rose to 77.8 in May from a prior reading of 76.4 in April -- much stronger-than-expected -- and the highest level since January 2008. Economists, on average, thought the reading would tick down to 76 and generally attributed the rise that happened instead to the recent drop in gasoline prices.

Amna Asaf, an economist at Capital Economics, warned though that if equity prices continue on their downward trend, any further fall in gasoline prices may not be enough to hold up consumer confidence for much longer.

"Overall, the preliminary reading isencouraging, but we suspect that the final reading of confidence, which will be more affected by the most recent slump in stock markets, could be notably weaker than this."

Dan Greenhaus, chief global strategist at BTIG, added that if the labor market remains weak and the stock market declines further, there is an almost "assured guarantee that sentiment would move lower in tandem."

In other U.S. economic news, the Labor Department reported that the producer price index for April fell 0.2%, when economists, on average, expected it to be flat. The core PPI, which excludes food and energy, rose 0.2% as expected.

The lower headline number was driven by energy prices, which fell 1.4%. Eric Green, chief economist at TD Securities, expects that over the coming months, the PPI will continue to trend lower.

"That is good for profit margins in a time of rising unit labor costs," said Green. "On the retail side it is a positive for real income growth."

In Europe, London's FTSE rose 0.6% and the DAX in Germany settled up 0.95%.

The big story of the day stateside was JPMorgan's disturbing revelation late Thursday of a stunning $2 billion trading loss in the bank's synthetic credit portfolio.

JPMorgan CEO Jamie Dimon said the bank's corporate division could post a $800 million after-tax loss because of the "egregious" trading mistake. The unit was previously seen posting a loss of roughly $200 million.

"The JPMorgan ... was not necessarily above reproach, but they were certainly one of the more well-respected, and viewed as more secure banks out there," said Jonathan Upton, strategist, Lamkin Wealth Management.