Stocks Close Flat After Volatile Session

Stocks finished little-changed after another up-and-down session.

Major indexes surrendered early gains and entered the last two hours of trading at flat to slightly higher as Wall Street gets set to close out another trading year. Monday is the last day of activity on the domestic markets.

A fresh batch of indications that the economy was lagging tempered a surge that began last week and was halted Thursday. Stocks opened significant higher today but fell throughout the morning as light trading made for high volatility.

The National Association of Purchasing Management-Chicago business barometer showed that business activity in the Midwest expanded in December at a faster rate than expected, but there were significant drops in employment and prices paid.

Also, sales of new single-family homes fell much more than expected to an annual rate of 647,000 in November, the slowest pace in more than 12 years, the Commerce Department said.

And the situation in Pakistan continued to generate unease as rioting continued following the assassination Thursday of opposition leader and former prime minister Benazir Bhutto.

"If you're going into a weekend when there could be more disruption, you don't want to be long the market, particularly at the end of the year," said Quincy Krosby, chief investment stragetist at The Hartford. "In a market which has very thin volume, any kind of issue that is weighing on the market is going to skew the market quite heavily."

Among factors driving the financial sector during the day was news that Citigroup and HSBC will start shedding non-core businesses. The  Wall Street Journal reported that banks in Europe and the US, including Citigroup, are considering a variety of measures to brace against difficult times ahead. Among the measures are closing individual branches or even entire units.

Financials were broadly lower, with shares falling at Bear Stearns , Merrill Lynch and Bank of America .

Energy Higher, Insurers Stumble

All 30 Dow industrial components moved to the plus side at the open but most gave back their gains as the day wore on, with losers beating winners 2 to 1 in the bluechips.

Caterpillar led gainers, while energy companies including ExxonMobil and Anadarko paced the S&P 500.

Elsewhere in the markets, billionaire investor Warren Buffett took focus as he made steps to profit from subprime-battered credit markets.

Buffett's Berkshire Hathaway plans to launch a municipal-bond insurer, which is expected to guarantee the bonds that cities, counties and states use to finance public works.

The new insurer, Berkshire Hathaway Assurance, should receive a license to operate from New York State's insurance department by Monday, department spokesman Andrew Mais told Reuters.

But that was bad news for bond insurers, and shares sank precipitously at several companies including Ambac and MBIA .

Also, Genesco shares soared on news that a Tennessee court has ordered Finish Line to close the $1.5 billion acquisition of the shoe and hat retailer.

© 2009 CNBC.com