Stocks tottered in and out of positive territory after Pakistani officials said forces had surrounded Osama bin Laden’s top lieutenant, Ayman al-Zawahri, in a remote region near the Afghan border. But while the news temporarily checked selling momentum after two sessions of gains, it could not fully stanch the market’s larger downward trend.

Investor confidence continues to sag on concerns about the sluggish job market, listless bond yields, inflationary pressures and political uncertainty at home and abroad.

"There are some who believe we’ve had a classic 10 percent correction and that this is a good buying opportunity, but I tend to think we’ll see the market correct a bit more," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "There are so many factors making the downside the path of least resistance ... investors are acting more conservatively and taking defensive positions."

According to preliminary results, the Dow Jones industrial average fell 4.52, or 0.04 percent, to 10,295.78, rebounding from steep declines earlier in the day.

The broader gauges also declined. The Nasdaq composite index lost 14.32, or 0.7 percent, to 1,962.44. The Standard & Poor’s 500 index was down 1.44, or 0.1 percent, at 1,122.31.

Word that hundreds of Pakistani troops had met fierce resistance from fighters entrenched along the South Waziristan frontier bumped all the major indexes up from their session lows, and sent oil and currency prices churning. Wall Street’s reaction reflected investors’ uncertainty about the current market’s strength.

"The market’s up, the market’s down, it’s enough to make your head spin. ... I think the one thing that’s certain is volatility is coming back," said John Caldwell, chief investment strategist for McDonald Financial Group. "This is still a market that doesn’t know what it wants to do."

Investors seemed unimpressed with the Labor Department’s report that claims for unemployment benefits fell last week to their lowest level in more than three years, surprising analysts who had forecast a slight increase after two weeks of declines. The news raised hopes that the pace of layoffs had slowed to a point where businesses might begin rehiring workers in larger numbers.

In another report, the government said inflation at the wholesale level jumped by 0.6 percent in January, reflecting the largest jump in energy prices since the start of the Iraq war. The data was released a month late because of recent changes to the system used for tracking price changes.

Crude oil was trading at $37.93 a barrel, down 25 cents from the 14-year price peak it reached yesterday, but still high enough to make investors nervous. Dwindling stockpiles and rising demand could drive prices higher still. U.S. car owners may be paying more than $2 per gallon this summer if the trend continues.