By Ryan Vlastelica
NEW YORK (Reuters) - U.S. stocks ended a volatile session mostly flat on Friday as investors digested comments from Federal Reserve officials that raised questions about how quickly the central bank will end its stimulus program.
Wall Street opened higher but subsequently pared gains after Philadelphia Fed President Charles Plosser said the Fed faced "immense" challenges now that it had reduced bond-buying, and that it needed to be cognizant of a potential rapid rise in future inflation.
Volatility was exacerbated by light trading volume, with about 4.61 billion shares traded on all U.S. platforms, according to BATS exchange data, well below average, with many market participants out in the wake of the New Year's holiday, as well as a snowstorm in the northeast.
"Plosser suggested that it might not be an easy or smooth process for the Fed to unwind its balance sheet, which could have been be an indication the Fed could act sooner on ending bond buying than is currently expected," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Following Plosser's comments, Fed Chairman Ben Bernanke said that the central bank was no less committed to accommodative monetary policies despite the recent announcement that it would slow its stimulus program. He also said the U.S. economic recovery "clearly remains incomplete.
Equities briefly turned positive following the comments before returning to breakeven territory.
The Dow Jones industrial average <.DJI> was up 28.64 points, or 0.17 percent, at 16,469.99. The Standard & Poor's 500 Index <.SPX> was down 0.62 points, or 0.03 percent, at 1,831.36. The Nasdaq Composite Index <.IXIC> was down 11.16 points, or 0.27 percent, at 4,131.91.
The S&P's slight decline marked the first time since 2005 that the benchmark index started a year with two straight negative sessions. For the week, the Dow fell less than 0.1 percent while both the S&P and Nasdaq lost 0.6 percent.
"Valuations are full, but not egregiously rich right now," said Luschini, who oversees about $60 billion in assets. "In order for markets to really outperform now, we need to see better growth develop and for earnings to brighten considerably."
Crude oil fell 1.3 percent, bringing its 2014 year-to-date losses to 4.3 percent, a fact that boosted airline stocks on Friday. Delta Air Lines
About 62 percent of stocks traded on the New York Stock Exchange closed higher on the day, while 59 percent of Nasdaq-listed shares ended in positive territory.
(Editing by Nick Zieminski)