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NEW YORK (Reuters) - Stocks ended Friday's session little changed after a three-day drop, but logged their worst week in nearly four months on concern that the Federal Reserve could signal the start of a reduction in its stimulus program at its policy-setting meeting next week.
Investors in U.S.-based funds pulled $6.51 billion out of stock mutual funds in the week ended Wednesday, representing the biggest weekly outflow this year, data from Thomson Reuters' Lipper service showed on Thursday.
In a bullish signal, the S&P 500 closed on Friday right above 1,775 - considered a technical support level. At less than 2 percent below its record closing high, the S&P 500's pullback for the week shows no signs of investor panic, traders said.
Investors have been trying to gauge the timing of an expected winding down of the U.S. central bank's bond-buying stimulus, with many market participants expecting the Fed to announce a tapering in March.
Stronger economic data of late, however, has led some to shorten that timeline to as soon as the end of next week's two-day meeting.
"Focus is still on what the Fed says next Wednesday. There's a set of people that think (the Fed) is going to announce a tapering, but I think what we will have is more clarity," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York.
Economic data on Friday showed producer prices declined in November for a third straight month, indicating a lack of inflation pressure that could give the Federal Reserve some wiggle room as it weighs the future of its stimulus.
The Dow Jones industrial average .DJI rose 15.93 points or 0.1 percent, to end at 15,755.36. The S&P 500 .SPX dipped a mere 0.18 of a point or 0.01 percent, to finish at 1,775.32. The Nasdaq Composite .IXIC added 2.572 points or 0.06 percent, to close at 4,000.975.
For the week, the Dow and the S&P 500 each lost 1.65 percent and the Nasdaq fell 1.52 percent. It was the largest weekly percentage drop for the indexes since August.
T-Mobile US TMUS.N shares jumped late in regular trading after a Wall Street Journal report that Sprint (S.N) is mulling a bid for its rival. T-Mobile US shares shot up 8.7 percent to close at $27.64 while Sprint gained 3.4 percent to end at $8.43. After the bell, Sprint further extended its gain by 3.1 percent.
Shares of International Paper (IP.N) rose 3.6 percent to close at $47.83 and led the gainers in the S&P 500's materials sector. Jefferies said in a research note that there are signs of demand pickup in containerboard, and the recent pullback in IP and others has created a buying opportunity.
In the energy sector, shares of Anadarko Petroleum Corp (APC.N) fell 6.4 percent to $78.31 a day after a U.S. judge ruled that Anadarko and its Kerr-McGee unit acted with "intent to hinder" when they spun off Tronox (TROX.N), a paint materials company that later went bankrupt. The judge ruled that Anadarko and Kerr-McGee should pay billions of dollars in environmental cleanup costs. Tronox shares gained 7.5 percent to $22.76.
Adobe Systems Inc (ADBE.O) climbed 12.8 percent to $60.89 a day after the maker of Photoshop and Acrobat software reported a surge in the number of subscribers to its Creative Cloud suite from the previous quarter.
Twitter Inc (TWTR.N) shares rose 6.6 percent to a record closing high of $59 a day after the company was forced to nix a change to its "block" feature after users protested that the new policy empowered perpetrators of online abuse.
Advancers beat decliners on the NYSE by a ratio of 4 to 3. On the Nasdaq, about seven stocks rose for every five that fell.
About 5.5 billion shares changed hands on U.S. exchanges, below the 6.1 billion average so far this month, according to data from BATS Global Markets.
Editing by Jan Paschal