Stocks fluctuated between small gains and losses in a light-volume session on Tuesday, suggesting a 5 percent rally over the past four trading sessions may have largely run its course.

The S&P 500 turned positive for the year on Friday, with improving economic data helping to boost equities. The gains, which lifted the benchmark index above its 200-day moving average, were amplified by the light pre-holiday trading.

Doug Roberts, chief investment strategist at Channel Capital in Shrewsbury, New Jersey, said stocks were likely to drift higher into the end of the year even if gains were slight.

We'll probably have a slight drift upwards but there's not a lot of volume, he said. In the absence of any bad news, we could see a drift up over the next four days.

In the latest economic data, consumer confidence rose more than expected in December, hitting an eight-month high, as Americans grew more upbeat about the labor market and their financial situations.

Sears Holdings Corp slid 20 percent to $36.73 to its lowest in nearly three years. The retailer plans to close 100 to 120 Kmart and Sears stores and said fourth-quarter earnings would fall by more than half from a year ago.

The Dow Jones industrial average <.DJI> dropped 1.74 points, or 0.01 percent, to 12,292.26. The Standard & Poor's 500 Index <.SPX> gained 0.28 point, or 0.02 percent, to 1,265.61. The Nasdaq Composite Index <.IXIC> gained 0.09 point, or 0.00 percent, to 2,618.73.

Going into the last trading week of the year, the Dow is up 6.2 percent and the Nasdaq is down 1.3 percent. The S&P's performance is turning out to be the flattest in more than 40 years. The index is up less than 1 percent, which is its smallest move in either direction since 1970.

Equity markets often benefit from seasonal strength into the end of the year -- a phenomenon known as the Santa Claus rally. The last five days of the year and the first two of January have produced an average 1.6 percent gain for the S&P 500 since 1969, according to the Stock Trader's Almanac.

However, investors have warned about reading too much into the year-end rally. They warn that the outlook for the year ahead is still murky with many of the same problems that dogged markets in 2011 still unresolved.

Lest anyone get too excited, this relatively constructive outlook heading into 2012 represents only a brief reprieve from elevated equity volatility, said Jim Strugger, a derivatives strategist at MKM Partners in a note.

The outlook from Sears dragged on other retailers. JC Penney shares fell 1 percent to $35.32, while Morgan Stanley's retail index edged down 0.5 percent. Stock in Sears fell to its lowest since March 2009.

U.S. single-family home prices fell slightly more than expected in October, according to S&P/Case-Shiller data, coming after better-than-expected data on the sector last week.

MetLife Inc , the largest U.S. life insurer, will sell about $7.5 billion worth of deposits in its MetLife Bank to a General Electric Co unit as it looks to exit the banking business. MetLife rose 1.5 percent to $31.56 while GE was down 0.3 percent at $18.17.

Bank of America Corp , which is lagging behind major U.S. competitors in complying with new capital rules, may sell more assets, sources said. Shares of the Dow component fell 0.7 percent to $5.56.

Mead Johnson shares rose nearly 6 percent to $69 after the maker of Enfamil baby formula said its products were safe, even as U.S. health officials continue their investigation following the death of an infant. Over two days last week, the shares fell more than 15 percent.

(Reporting By Edward Krudy; editing by Kenneth Barry)

Corrects paragraph 9 to show Santa rally includes first two days of January.