Investors are fearing they may have bet too soon on an economic comeback.
Stocks ended mostly lower Monday as drops in prices for oil and other commodities spurred worries that demand for basic materials may remain slack. Indexes ended mixed but off of their lows for the day.
The drop in oil to a five-week low pushed energy and commodity stocks lower and sent investors into safe-haven parts of the market, like consumer goods producers. Occidental Petroleum slid 2.5% while Procter & Gamble, which makes Tide and Crest, rose 2%.
The back-and-forth trading Monday followed conflicting signs about the economy. Oil skidded on fears of weak demand, while a trade group's report found that activity in the services index rose in June to its best level in nine months.
Investors have become more cautious in recent weeks following a strong rally that began in March. Some traders fear they might have been too optimistic about how soon the economy might recover from a recession that began in December 2007.
"The markets are becoming more realistic," said Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto. "We can't snap our fingers and have recovery."
The Dow Jones industrial average rose 44.13, or 0.5%, to 8,324.87, and the broader Standard & Poor's 500 index rose 2.30, or 0.3%, to 898.72. The technology-heavy Nasdaq composite index fell 9.12, or 0.5%, to 1,787.40.
Oil fell $2.68 to settle at $64.05 per barrel on the New York Mercantile Exchange. Last week, oil hit an eight-month high above $73.
In economic news, the Institute for Supply Management's services index rose to 47 in June from 44 in May, beating the expectation of 45.5 from economists polled by Thomson Reuters.
The relatively good showing, however, wasn't enough to assuage growing doubts about the economy that worsened last week on disappointing reports on consumer confidence and deep job cuts for June.
The stock market has relatively few guideposts to give it direction this week ahead of second-quarter earnings reports, which get underway on Wednesday with Dow component Alcoa but don't pick up speed until next week.
Sound results at a Treasury Department auction of $8 billion in 10-year Treasury Inflation-Protected Securities, or TIPS, helped reassure investors that the government will be able to finance its spending plans to help revive the economy.
An analyst upgraded his rating on American Express, saying that the credit card company would be among the least affected by regulatory changes and that worries about bad debt are easing. The stock rose $1.25, or 5.6%, to $23.52.
The drop in oil hit energy and commodity stocks. ExxonMobil fell 39 cents, or 0.6%, to $68.10, and Occidental fell $1.58, or 2.5%, to $61.70.
Alcoa fell 60 cents, or 6.1%, to $9.26, while Freeport-McMoRan Copper & Gold fell $3.78, or 7.6%, to $45.94.
Among consumer staples companies, P&G rose $1.06, or 2.1%, to $52.17. General Mills, the maker of Cheerios and Yoplait yogurt, advanced $1.90, or 3.3%, to $60.40.
The mixed trading comes after the market reached a plateau in mid-June, mainly holding on to the gains it notched this spring. Investors are looking for confirmation of an economic recovery to take stocks higher. The upcoming earnings season and any forecasts companies make about the rest of the year are sure to answer questions about where the market goes next.
"There is a sense that the fundamentals in the marketplace haven't caught up with the technical rally that we got in March," said Dan Deming, a trader with Strutland Equities in Chicago.
U.S. markets are catching up after being closed Friday for the July Fourth holiday. On Thursday, stocks fell sharply in response to the Labor Department employment numbers, pushing major indexes down more than 2%.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.1 billion shares, compared with a light 733.6 million traded Thursday.
The Russell 2000 index of smaller companies fell 3.18, or 0.6%, to 494.03.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note was flat at 3.50%, and the yield on the three-month T-bill rose to 0.16% from 0.15% late Thursday.
The dollar was mixed against other major currencies, while gold prices also rose.
Overseas, Britain's FTSE 100 fell 1%, Germany's DAX index fell 1.2%, and France's CAC-40 slid 1.1%. Japan's Nikkei stock average fell 1.4%.