Stocks churn on Friday as the S&P 500 heads for the best week since 2020

U.S. equities were mixed on Friday following a three-day rally for the S&P 500 that put the equity benchmark on pace for its biggest weekly gain in more than a year.

The Dow Jones Industrial Average fell 29 points, or 0.3%. The S&P 500 gained 0.1%, and the Nasdaq Composite rose 0.7%.

Stocks are coming off a massive three-day surge that has the S&P 500 set up for its best week since November 2020. The broad market index is up more than 4% for the week, while the tech-heavy Nasdaq Composite has advanced more than 5% this week and it headed for its best week since February 2021.

Meanwhile, the blue-chip Dow is going for its fifth up day in a row. It's risen 4.3% for the week and is also on track for its biggest weekly gain since November 2020.

Stocks took a breather Friday as investors continued to digest the news from the Federal Reserve earlier this week, as well as the ongoing war between Russia and Ukraine and a rise in Covid cases in Europe stemming from an emerging subvariant.

Investors were also assessing their risk appetite. Despite the week's big gains, they didn't come without their share of volatility, which has showed no signs of tempering anytime soon.

"For 2022, volatility is going to be the investor narrative," Greg Bassuk, CEO of AXS Investments, told CNBC. "We would normally feel much more bullish around any single factor having a good ability to level the volatility, but given this unprecedented level of very significant factors that could drive the markets one way or another, we don't see volatility normalizing over the next couple of months."

On Friday shares of FedEx fell more than 5% after the U.S. delivery firm posted a lower-than-expected quarterly profit amid labor shortages, while the pandemic also hurt its holiday revenue growth.

GameStop saw its shares dropping about 2% after the video game retailer reported an unexpected loss during the holiday quarter. The company said it will launch a new marketplace for non-fungible tokens, or NFTs, by the end of April.

Friday's moves come as traders continued to digest the latest developments in the Ukraine-Russia war.

Several missiles hit an aircraft repair center on the outskirts Lviv in western Ukraine. Meanwhile, President Joe Biden is slated to speak with Chinese President Xi Jinping to discuss the conflict. A Ukrainian official also said one person was killed in an airstrike that hit Kyiv. (Click here for live updates.)

Russia on Thursday reportedly made a $117 million bond payment in dollars, thereby avoiding what would be a historic foreign currency debt default. Stocks extended their gains following the report.

Traders are also still digesting the latest Federal Reserve update from earlier this week. The central bank signaled it expects to raise rates at its remaining six meetings this year. The Fed also raised rates for the first time since 2018 on Wednesday.

On Friday, Fed Governor Christopher Waller told CNBC's "Squawk Box" the central bank may need to enact at least one more interest rate hike this year of at 50 basis points or more in order to tame "raging" inflation.

"Fortunately, investor expectations for inflation over the next five years was brought down quite a bit, which, if sustained, will continue [to] be helpful for the Fed and the markets despite somewhat higher interest rates," said John Vail, chief global strategist at Nikko Asset Management.