NEW YORK (AP) – Investors struggled Wednesday to turn Wall Street’s best performance this year into a two-day advance.

Stocks fluctuated in early afternoon trading as caution returned to the market after a day of furious buying.

“People are looking past the sizzle and saying where’s the steak,” said Doug Roberts, chief investment strategist for “That is why the market is bouncing around.”

Financial stocks that led the market’s huge rally Tuesday were mostly higher, but off their earlier highs. Tech stocks rose after an analyst raised Hewlett-Packard Co.’s rating.

Analysts were again cautioning that the market remains deeply troubled by the ongoing problems in the banking industry and the impact of the recession on companies in all industries. So a big follow-up advance was unlikely.

“To me, it would be a victory to even close flat today,” said Jeff Mortimer, chief investment officer for Charles Scwhab Investment Management.

“You need to have another day pass and see how the market likes the 700 level and does it still consider it reasonable,” he added, referring to the benchmark Standard & Poor’s 500 index.

Short-term traders were dominating the market again, analysts said, adding to the choppiness.

Tuesday’s rally was primarily a short-covering rally, Mortimer said, and in order for the market to maintain its current levels and move higher, true long-term buyers need to come back into the market. Short covering occurs when investors need to buy stock to replace shares that were borrowed and then sold on expectations of a market decline. Analysts attributed much of Tuesday’s big rally to short covering.

On Wednesday, the head of the Securities and Exchange Commission said the agency “hopefully” will propose next month the reinstatement of the uptick rule, which aims to prevent a massive plunge in stock price fueled by short selling.

In midafternoon trading, the Dow Jones industrials rose 6.85, or 0.1 percent, to 6,933.34. The Standard & Poor’s 500 index rose 2.68, or 0.4 percent, to 722.28, while the Nasdaq composite index, which has a heavy representation of tech stocks, rose 13.28, or 1 percent, to 1,371.56.

The Russell 2000 index of smaller companies slipped 0.57, or 0.2 percent, to 367.18.

Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume came to 970.9 million shares.

News that Citigroup Inc. was operating at a profit fueled the market’s advance Tuesday. The Dow shot up nearly 380 points, and both the S&P 500 index and Nasdaq composite rose more than 6 percent.

For there to be a sustained advance, there has to be “many, many days of positive tone and the market interpreting data and news as more positive than negative,” said Roman Dubczak, head of equity capital markets at CIBC World Markets.

Even bear market rallies can last longer than a single day, said Mike Stanfield, chief executive of VSR Financial Services.

A bear market is defined as a drop of 20 percent from a market peak; Wall Street does have rallies during bear markets, but they tend to disappear quickly as investors remain pessimistic. Both the Dow and S&P are at levels less than half the record highs they reached in October 2007.

“If you go back a year and a half, every single rally has turned out to be a bear market rally,” Stanfield said. “So I think you’d have to guess that this is another (one).”

Investors kept their eyes on the financial industry Wednesday, as many analysts believe it will be the leading indicator of when the market begins to turn around.

“The easiest thing to watch is the financials,” Stanfield said. “We’re not going to have a solid recovery beginning until we make a solid bottom on financials.”

Citigroup rose 5 cents, or 3.5 percent, to $1.50, after earlier rising as much as 18 percent. JPMorgan Chase & Co. rose 57 cents, or 2.9 percent, to $20.07.

Apple Inc. rose $4.50, or 5.1 percent, to $93.13 after announcing a new version of its iPod shuffle. Hewlett-Packard jumped $1.26, or 4.7 percent, to $28.30.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.02 percent from 3 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.23 percent from 0.24 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell $2.26 to $43.45 a barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average jumped 4.55 percent and Hong Kong’s Hang Seng rose 2.02 percent. Britain’s FTSE 100 fell 0.58 percent, Germany’s DAX index rose 0.70 percent, and France’s CAC-40 rose 0.39 percent.

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AP-ES-03-11-09 1356EDT

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