Stocks fluctuate as investors remain cautious

A not-so-bad economy is no longer good enough for Wall Street.

Stocks slumped Friday, extending their losses for the week and further chilling a spring rally that sent major stock indexes up more than 30% on economic reports that weren’t as dismal as expected.

There was some relatively good news Friday: U.S. industrial production and New York-area manufacturing activity contracted less than economists expected. And a Reuters/ University of Michigan index of consumer sentiment rose to an eight-month high this month.

But traders saw in the data little reason to bid up stocks.

“This market is tired,” said Joe Saluzzi, co-head of equity trading at Themis Trading.

The Dow Jones industrials slid 62.68 points, or 0.8%, to 8,268.64. The Standard & Poor’s 500 index fell 10.19 points, or 1.1%, to 882.88. The Nasdaq composite index fell 9.07 points, or 0.5%, to 1,680.14.

The Russell 2,000 index of smaller companies fell 1%.

For the week, the Dow slumped 3.6%, the S&P; index sank 5%, the Nasdaq slid 3.4% and the Russell 2,000 lost 7%.

Still, the S&P; 500 index and the Dow are up 31% and 26%, respectively, from their 12-year lows set March 9.

Not all the news of the day fit with the notion of an economy on the mend.

The Treasury Department agreed to extend billions in bailout funds to six big life insurers. The move is good for the insurers but also suggests their problems pose a serious risk to the financial system.

Hartford Financial Services Group said it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP, and Lincoln National said it has been initially approved for a $2.5-billion injection. Shares of Hartford fell 1%, and Lincoln declined 0.7%.

In other market highlights:

* General Motors dropped 5.2% after it began telling 1,100 dealers that their franchise pacts would not be renewed.

* Energy stocks slumped as oil slid $2.28 to $56.34 a barrel. Schlumberger lost 3.5%. Devon Energy sank 5.7%.