Stocks spent most of Monday in a funk brought on by cautious comments about the economy from Federal Reserve Chairman Ben Bernanke. Hopes for a compromise on extending Bush-era tax cuts and unemployment benefits erased some of the losses.
The Dow Jones industrial average ended down 20 points, breaking a three-day winning streak from last week. Stock indexes traded in a tight range all day and volume was light.
Stocks began the day on a sour note after Federal Reserve Chairman Ben Bernanke said the economic recovery is still struggling to become "self-sustaining" without government help.
In an interview with CBS' "60 Minutes" that aired Sunday, Bernanke argued that Congress shouldn't cut spending or boost taxes given how fragile the economy remains. He also said it could take four or five more years for unemployment, now at 9.8 percent, to fall to a historically normal 5 percent or 6 percent.
Stocks recovered somewhat in the afternoon after Obama said in a speech that he would cede ground to help lawmakers reach an agreement on the tax cuts and unemployment benefits.
The Dow Jones industrial average fell 19.90, or 0.2 percent, to close at 11,362.19. The index had been down as many as 32 points earlier in the day.
The broader Standard & Poor's 500 index lost 1.59, or 0.1 percent, to 1,223.12. The Nasdaq composite index rose 3.46, or 0.1 percent, at 2,594.92.
Last week, strong reports on home sales, retail spending and consumer confidence lifted the Dow 2.6 percent, its best weekly gain since hitting a 2010 high on Nov. 5. The Dow is up 8.9 percent for the year.
"The animal spirits of investors remain bullish," said Channing Smith, a money manager and managing director of Capital Advisors Inc. However traders still have concerns about the lingering European debt crisis and the state of U.S. economy, he said.
Treasury prices rose as investors put money into less risky assets. The yield on the 10-year Treasury note, which moves opposite to its price, fell to 2.95 percent from 3.00 percent late Friday. That yield helps set interest rates on many kinds of loans including mortgages.
Gold for February delivery added $9.90 to settle at $1,416.10 an ounce. Silver gained 46.40 cents to settle at $29.735 an ounce.The dollar rose 0.4 percent against an index of six other currencies.
In corporate news, Barnes & Noble Inc. shot up $1.41, or 10.6 percent, to $14.69 after activist investor William Ackman and other shareholders of Borders Group Inc. said they were prepared to finance a $16 per share takeover bid for Barnes & Noble.
Sprint Nextel Corp. jumped 25 cents, or 6.4 percent, to $4.17 after the company said it would start phasing out the Nextel part of its network in 2013. That decision follows near-constant subscriber losses since Sprint bought Nextel in 2005.
Massey Energy Co. rose $1.21, or 2.4 percent, to $51.63 after the company issued a surprise announcement late Friday that its chairman and CEO, Don Blankenship, would retire at the end of the year. Blankenship is still expected to testify this month about the April 5 explosion at the Upper Big Branch mine, the nation's worst coal mine disaster in decades.
Rising shares and falling ones were almost evenly matched on the New York Stock Exchange. Trading volume was a light 804 million shares.