The Dow Jones industrial average (INDU) lost 7 points, or 0.1%. The S&P 500 (SPX) index slipped 2.7 points, or 0.4%. The Nasdaq composite (COMP) tumbled 27 points, or 1.9%.

Stocks had gained through the early afternoon on a jump in bank shares and some upbeat comments from Federal Reserve Chairman Ben Bernanke. But the advance lost steam late in the afternoon, with investors pulling back after four sessions of gains last week.

"There's some optimism in the market, but it hasn't been a massive push out of cash and into equities," said Paul Brigandi, vice president of trading at Direxion Funds. "Investors are still proceeding with caution. They want to see that it's not just a bear market rally before they commit more."

Stocks rallied last week, bouncing back after the Dow and S&P 500 hit 12-year lows. The week was Wall Street's best since last November, as the Dow gained 9%, the S&P 500 rose 10.7% and the Nasdaq added 10.6%.

Bernanke's comments and some encouraging news from the bank sector helped pace the advance by building confidence.

"Sentiment was really negative a week ago, and so each day the market goes up, the sentiment improves," John Forelli, portfolio manager at Independence Investments said.

Forelli said the advance could continue in the short run if investors can believe the economy is in the healing process. Yet, the run is bound to hit some speed bumps when quarterly results start pouring in next month.

"If you thought the fourth-quarter earnings were bad, get ready for the first quarter," he said.

Tuesday also brings reports on housing starts and building permits, as well as the Producer Price Index (PPI), a measure of wholesale inflation.

Alcoa (AA, Fortune 500) was among the stocks likely to be active Tuesday. After the close Monday, the aluminum maker and Dow component said it will cut its dividend, issue stock and convertible notes worth about $1.1 billion and cut its spending in 2010 amid the slowdown. Shares plunged 10% in extended-hours trading.

Banks: British bank Barclays (BCS) joined the list of companies saying it had a good start to the year.

Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) all said similar things last week.

But after rallying through the early afternoon, bank stocks ended mixed. Citigroup (C, Fortune 500) rose 31% and Bank of America (BAC, Fortune 500) gained 7.3%. But Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and others abandoned gains as the market turned lower.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by three to two on volume of 1.9 billion shares. On the Nasdaq, decliners topped advancers five to four on volume of 2.17 billion shares.

Bernanke: Speaking on CBS's "60 Minutes" this weekend, Federal Reserve Chairman Ben Bernanke said that the recession will "probably" end this year if the government is successful in stabilizing the flailing banking system.

The Fed is meeting Tuesday and Wednesday to discuss interest rates, with an announcement expected Wednesday afternoon. The central bank is expected to hold the fed funds rate, its key short-term interest rate, essentially at zero.

However, the Fed could announce that it's going to start buying long-term U.S. Treasurys after saying it was prepared to do so at its last few meetings.

Obama: President Obama said he will try to block millions in bonuses paid to AIG executives, which were given even as the company received $170 billion in federal bailout money.

On Wednesday AIG (AIG, Fortune 500)'s CEO Edward Liddy will go before a House panel investigating the government's involvement in the troubled insurer.

The president, along with Treasury Secretary Timothy Geithner, also announced new efforts to increase loans for small businesses. (Full story)

G-20: Finance ministers of the Group of 20 industrialized nations meeting over the weekend promised to do whatever is necessary to fix the global economy and repair the shaky banking system. The group also backed increased support for emerging markets.

But the group remained wary of a U.S. proposal for a broader coordinated government spending plan to stimulate global economies. A summit of the group's national leaders is scheduled in London on April 2.

Economy: Industrial production continued to decline last month, as the recession wore on. The government said production fell by a seasonally adjusted 1.4% in February versus forecasts for a fall of 1.3%. Production fell 1.9% in the previous month.

Capacity utilization, a measure of factory output, fell to 70.9% from 71.9% in January. Economists surveyed by Briefing.com thought it would fall to 71%.

The NY Empire State index, a key regional manufacturing report, fell to a record low of negative 38.2 in March from negative 34.7 in February.

Bonds: Treasury prices inched lower, raising the yield on the benchmark 10-year note to 2.95% from 2.90% Friday. Treasury prices and yields move in opposite directions.

Lending rates were little changed. The 3-month Libor rate fell to 1.31% from 1.32% Friday, while the overnight Libor rate held at 0.33%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian and European markets ended higher.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for April delivery rose $1.10 to settle at $47.35 a barrel on Monday.

COMEX gold for April delivery fell $8.10 to settle at $922 an ounce. 

At 7 a.m. ET, Standard & Poor's 500, Dow Jones industrial average and Nasdaq-100 futures were higher.

Friday's modest gains pushed the Dow up 9% over the past four sessions. A week ago, the blue-chip indicator stood at a nearly 12-year low.

Robert Brusca, chief economist at Fact and Opinion Economics, said positive comments from Federal Reserve Chairman Ben Bernanke helped to fuel early morning trading, as well as strength in the overseas markets.

"He was reassuring," said Brusca. "I think he's got the right balance of reactions to what's going on. [He said] we'll all get through this if we have the political will. My sense of it is that we're heading in the right direction."

Economy: Bernanke, in an interview on CBS' "60 Minutes," said that while obstacles remain, government officials are laying the groundwork for an economic recovery that can begin next year.

Finance ministers of the G-20 nations met over the weekend in Horsham, England, urging more regulation and oversight of fiscal institutions to help prevent another monetary crisis. They also backed increased support for the International Monetary Fund and Asian Development Bank.

The ministers, including Treasury Secretary Tim Geithner, set the groundwork for the meeting of G-20 leaders on April 2 in London.

In the United States, Geithner and President Obama are scheduled to unveil a plan Monday to increase lending to small businesses.

The government issues its report of industrial production and capacity utilization for February just before the opening bell. Economists surveyed by Briefing.com expect a decline in industrial production of 1.2%, compared to a 1.8% drop in January; capacity utilization is expected to have dropped to 71.1% from 72%.

Companies: AIG (AIG, Fortune 500), the beleaguered insurer, yielded to congressional demands Sunday and named the banks that have benefited from the $170 billion taxpayer-funded bailout of the company. Among those names are several European banks, and American companies Goldman Sachs and Merrill Lynch.

Global markets: Asian stocks ended higher, with Tokyo's Nikkei index up 1.8% . European stocks were higher in midday trading.

Oil slid $1.99 to $44.26 a barrel after OPEC ministers meeting in Vienna, Austria, agreed to keep production steady in order to help the global economy. The dollar slipped against the euro but rose against the yen. 

In a see-saw session, the Dow Jones industrial average (INDU) added 54 points, or 0.8%. The S&P 500 (SPX) index added 6 points, or 0.8%. The Nasdaq composite (COMP) gained 5 points, or 0.4%.

The Dow and S&P 500 ended Monday at 12-year lows, but shares bounced back since then. For the week, the Dow rose 9%, the S&P 500 rose 10.7% and the Nasdaq added 10.6%.

The advance this week was a "relief rally" following several months of selling, said Jamie Cox, managing partner at Harris Financial Group. Talk about reinstating the "uptick rule" that limits short selling - and changing mark-to-market accounting - added to the gains.

"All these things are the mustard seeds of a recovery, but we need to see more," Cox said. "Lack of confidence is a huge problem, and it's going to take a bigger effort to smoke out all the money on the sidelines."

While the four-day advance was a confidence-booster, investors will be tested next week to see if they can extend the rally. Next week brings reports on manufacturing, housing, wholesale and consumer inflation. The latest Federal Reserve policy meeting is on tap and Oracle (ORCL, Fortune 500) and FedEx (FDX, Fortune 500) are among the select companies reporting quarterly results.

"Ultimately we need a catalyst to move us higher," said Michael Sheldon, chief market strategist at RDM Financial Group.

Reinstating the uptick rule or changing mark-to-market accounting could change the playing field, he said. Similarly, stocks will likely benefit when the Treasury Department rolls out its private-public partnership to buy up bad assets.

Financials: Citigroup (C, Fortune 500) Chairman Richard Parsons told Reuters late Thursday that the financial services company won't need any more government help and that it will remain publicly traded. The stock plummeted in recent weeks on fears that it would have to be fully taken over by the government, which said last week it would lift its stake in Citigroup to as much as 36%.

Earlier this week, Citigroup CEO Vikram Pandit said the company was profitable in the first two months of the year. JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) have also said that the start of the year has seen some improvement.

Citigroup shares gained, but the rest of the financial sector was mixed. The KBW Bank (BKX) index, which tracks the largest bank stocks, lost 1.4% on Friday.

Drugmakers: The sector continued to rally one day after a series of mergers and other developments sent Pfizer (PFE, Fortune 500) and others rising.

Merck (MRK, Fortune 500) rallied 13% Friday after an analyst at Sanford C. Bernstein upgraded the stock to "outperform" from "market perform," Reuters reported.

Other movers: General Motors (GM, Fortune 500) rallied for a second session after saying Thursday that it won't have to take $2 billion in additional federal loans this month because its cost-cutting efforts have improved its cash position.

Fitch cut the credit rating on Warren Buffett's Berkshire Hathaway (BRKB) to AA+ from the top-tier AAA Friday, citing worries about the company's investments and Buffett's tight grip on the company.

Dow stock General Electric (GE, Fortune 500) was barely changed one day after a big rally. On Thursday, the stock surged even though S&P downgraded GE and GE Capital's top tier credit ratings to AA+ from AAA, with a "stable" outlook.

But Wall Street had been speculating that one of the major ratings agencies might issue a downgrade, and the stock had already slumped in anticipation of an announcement. GE shares rallied 12.7% Thursday.

Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 1.61 billion shares. On the Nasdaq, advancers topped decliners five to four on volume of 2.08 billion shares.

Economy: The nation's trade gap shrank in January to a six-year low, with imports topping exports by $36 billion in the month.

The University of Michigan's March consumer sentiment index rose to 56.6 from 56.3 in February, versus forecasts for a drop to 55.

Bonds: Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.90% from 2.86% Thursday. Treasury prices and yields move in opposite directions.

Bond prices reacted partly to comments from Chinese Premier Wen Jiabao, who said he was concerned that the rising U.S. deficit will erode the value of China's U.S. bond holdings.

Lending rates were unchanged. The 3-month Libor rate held steady at 1.32%, while the overnight Libor rate held at 0.33%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian and European markets ended higher.

In currency trading, the dollar fell versus the euro and the yen.

U.S. light crude oil for April delivery fell 78 cents to settle at $46.25 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $6.10 to settle at $930.10 an ounce.