The Dow Jones Industrial Average was up 33 points at 11,378.

The Nasdaq Composite Index rose 6.5 points to 2,154 while the S&P 500 Index gained 2 points to 1,299.73.

"You're going to have minimal volume with so many people out over the next two weeks. There is not a lot you can interpret from a market swing of up or down 30 to 50 points," said Jay Suskind, director of trading at Ryan, Beck & Co. But "it seems that Iran has responded and that has given some people hope there could be a diplomatic solution and maybe that is putting a little bid under the market."

The Dow Jones Industrial Average was down 37 points at 11,343.

The Nasdaq Composite Index fell 16 points to 2,148 while the S&P 500 Index was off 4 points at 1,298.

"You've got oil prices starting to come up a little bit. That has to do with the August 31 deadline coming up and comments coming out of Iran that there is not going to be any agreement here on a deal over its nuclear enrichment program," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.

An Iranian foreign ministry spokesman reiterated over the weekend that his country would not suspend its uranium enrichment program. In July, the United Nations passed a resolution calling on the country to suspend that program by August 31 or face sanctions. The U.S. and other Western powers suspect Iran is looking to build a nuclear bomb, but Iran claims its nuclear research is only for peaceful purposes.

"Lower oil was one of the three events that helped fuel the rally we had last week so we're probably going to start off the day with some potential profit taking," said Mendelsohn.

Art Hogan, chief investment strategist at Jefferies & Co., said the market could mimic its performance of the past week if conditions are right.

"This [past] week was driven by two catalysts: friendly economic data and lower energy prices. If we can continue either or both of those trends next week, I think the market could continue its rise."

The schedule of data due for release is light, but individual reports will attract investor attention. The report on orders for durable goods, or items built to last for at least three years, is due Thursday.

Stocks popped after the Commerce Department last month reported that durable-goods orders jumped a stronger-than-expected 3.1% last month. The gains later petered out mostly due to rising tensions in the Middle East.

Stocks could face a challenge when figures from the housing sector, which has been cooling, are released. The National Association of Realtors will put out its reports on sales of existing and new homes on Wednesday and Thursday. Homebuilder Toll Brothers Inc. will posts results on Tuesday.

But this time around, the figures will arrive in a less cluttered market than last month when Wall Street was knee-deep in corporate earnings.

"[We're in] a market that's moved beyond earnings season," said Hogan.

Michael Malone, trading analyst at Cowen & Co, is expecting stocks to trade sideways next week.

"I think a significant upside similar to the move we've seen in the last few days is unlikely, given the fact we've already made a relatively nice move off of the bottom," Malone said.

The market was lively this week with the benchmark indexes finishing five straight days of wins.

Jay Suskind, director of trading at Ryan, Beck & Co., said the market was able to put in a positive bid because there was "consistency" and a similar bias in the producer price and consumer inflation data.

"The next question is a hard or soft landing," for the economy, Suskind said.

But tobacco companies gained on a favorable court ruling and Microsoft's stock rallied after it boosted its share repurchasing program.

The Dow Jones Industrial Average was off 11 points at 11,323 after climbing more than 40 points in early trading to a session high of 11,377.14.

The Nasdaq Composite Index fell 16 points to 2,142 while the S&P 500 Index dropped 3 points to 1,294.

"It's a Friday in late August and volumes are low so I think it's difficult to say anything about market sentiment here," said Robert Pavlik, chief investment officer at Oaktree Asset Management. "Those of us who are here are questioning whether or not the recent rallies are sustainable."

Pavlik said the fact that the market rallied on tamer-than-expected inflation data was a positive, but questions remain about the extent of the economic slowdown that now appears well underway.

Over the last four days, the Dow has rallied 2.2% and the S&P 500 has risen 2.4%. But it's the technology-rich Nasdaq Composite that's seen the most buying, surging 4.9%, as investors snapped up beaten-down tech stocks.