US stocks waver between gains and losses

The major indexes rose in early trading, then wavered between small gains and losses the rest of the day. Investors were weighing competing reports about the health of the U.S. economy: A key measure of consumer sentiment came in lower than expected and spiraling gas prices continued to weigh down the nascent recovery, but the Labor Department also signaled that inflation outside of gas prices was relatively mild last month.

The Dow Jones industrial average was up 6 points in the later afternoon, to 13,258. The broader Standard & Poor’s 500 was up two points to 1,405. The Nasdaq composite index was down a point to 3,056.

“It’s almost like today was a spring training game that ended up getting rained out,” said Telly Zachariades, a partner at The Valence Group investment bank. He thinks the market will generally continue to rise, even if it’s marred by a few off-days.

But others think that the market’s rise earlier this week only masks underlying problems in the fundamentals of the economy, like uncertainty over oil prices and tax policies, and the country’s burgeoning deficit.

“The market is giving us a free pass on our unsustainable fiscal positions through the presidential election,” said Barry Knapp, head of equity strategies at Barclays Capital. “But in 2013, we’re going to have to deal with this.”

“What we’ve seen today,” Knapp added, “is a little bit of a warning sign.”

Competing data about the U.S. economy contributed to the market’s vacillations.

The University of Michigan’s closely watched consumer sentiment index came in below analysts’ expectations, driven by worries about gas prices. The Labor Department also noted that gas prices soared 6 percent in February.

Many analysts think the higher gas prices will crimp the U.S. economy by shrinking the amount of money that people have to spend on discretionary purchases. The higher prices are especially harmful to lower-income consumers, because a bigger chunk of their paychecks goes to gas.

Gas is currently selling for an average of $3.83 per gallon in the U.S., 31 cents more than a month ago. It has spiked as Iran’s continued nuclear program sows tension in the Middle East. Some analysts also blame the Federal Reserve, which has pumped cheap money into the economy in an attempt to help it recover. But that has also put pressure on the U.S. dollar. When the dollar falls in value, it takes more of them to buy the same amount of oil.

However, the Labor Department also noted that, excluding gas prices, inflation in other sectors seemed under control. Food prices, which have been rising, were unchanged for the first time in 19 months.

It’s been an exhilarating week for the stock market, with both the Nasdaq and the S&P 500 crossing milestones they hadn’t reached for years. On Tuesday, the Dow, the Nasdaq and the S&P 500 all recorded their biggest percentage gains of the year. As of Thursday, the Dow had climbed for seven straight days, its longest streak so far this year.

The euphoria was brought on by what investors saw as encouraging news about the unemployment rate and retail sales. Some cautioned that the improvements were incremental and unconvincing, driving short-term market surges but little else.

“It’s becoming so much of a sound bite economy,” said Ziad Abdelnour, CEO of private equity firm Blackhawk Partners.

Bonds and European markets also added to the confusion about where the market is trying to go. The yield on the 10-year Treasury continued to rise, hitting its highest levels since October ? a sign that investors are more comfortable with the economy. Markets in Europe finished higher.

In the U.S., Bank of America led the Dow higher, rising more than 5 percent after a report that its proportion of delinquent loans fell in February. Buffalo Wild Wings fell 3 percent after a Wedbush analyst lowered his rating to the equivalent of hold from buy, noting the high cost of wings.

Energy companies were the biggest gainers in the S&P 500 index. Transocean, an offshore drilling company, rose 5 percent after it reported that it had secured several new contracts. Analysts from at least three companies raised their price targets on the company.