The Dow Jones industrial average was down 94 points at its low but finished up 19.61 points at 13,145.82. The Standard & Poor's 500 index lost 2.26 points to close at 1,403.28, and the Nasdaq lost 9.60 points to 3,095.36.
The government released some incremental good news: The number of people seeking unemployment benefits to the lowest since April 2008, and economic growth for the last three months of last year was in line with expectations.
But the government also said many more people than originally estimated filed unemployment claims in recent months. And economists believe growth has slowed to an annual rate of about 1.5 percent from 3 percent last quarter.
A belief that the economy is improving has driven a strong rally in stocks this year. Now, "investors are pausing to examine whether the growth is real," said Lawrence Creatura, a Rochester, N.Y., portfolio manager at Federated Investors.
Investors are also waiting to see companies' earnings for the first three months of the year. The earnings season traditionally kicks off with Alcoa, which reports results April 10.
"We're in that odd period of silence," Creatura said. "It's like a bad Western movie where one guy turns to the other and says, 'It's quiet out here,' and the other says, 'Yeah, too quiet.' That's what today feels like it."
David Rolfe, chief investment officer at Wedgewood Partners in St. Louis, said he expects stocks to be volatile during earnings season. The S&P has gained as much in three months than some analysts thought it would all year.
"The stock prices got ahead of expectations," Rolfe said, "and there's a price to pay."
Some of the day's rally may have been buying ahead of the end of the first quarter on Friday, said Kenny Polcari, managing director at ICAP Equities.
The yield on the 10-year Treasury note fell to 2.16 percent from 2.21 percent. That means more investors put their money into the perceived safety of the bonds, which can be a sign they are pessimistic about the economy.
European markets fell across the board. In Spain, workers took to the streets to protest spending cuts. Yields crept up for government bonds issued by Spain and Italy, a possible sign of investor concern about those countries' debt problems.
The price of oil fell $2.63 to $102.78 in New York, the first time it has finished under $103 in more than a month, after France's prime minister said there was a "good chance" the U.S. and Europe would release oil reserves.
Concerns about the high cost of gasoline continue to weigh heavily over the economy, even though Thursday brought some temporary relief. The price of oil fell $2.63 per barrel in New York to $102.78.
Gasoline at the pump rose a penny, to an average $3.92 per gallon. Investors worry that the economic recovery could be threatened as the price of gas inches toward $4.11, the record, set in 2008.
President Barack Obama weighed in, making a plea to Congress to end $4 billion in tax subsidies to oil companies, but he was rebuffed when the Senate turned back a Democratic bill that would have done just that.
Among the stocks making big moves:
— Illumina, a diagnostics company, rose more than 5 percent to $52.40 after the Swiss pharmaceutical giant Roche Group raised its offer for the company to $51 per share.
— Best Buy fell nearly 7 percent after announcing big spending cuts, including plans to close 50 of its big-box stores.
— Sears Holdings, the embattled company that owns Sears and Kmart, fell 2 percent after reports it is considering selling Lands' End. That would free up cash but would mean jettisoning what is probably the company's most popular brand.
— Aetna, Cigna and UnitedHealth Group all rose 4 percent or more a day after the Supreme Court ended three days of arguments over whether Obama's 2010 health care law meets constitutional muster. The court is expected to rule in June.