NEW YORK - Stocks closed barely changed in light trading Tuesday amid mixed economic news. Consumer confidence surged to an eight-month high, but home prices dropped in major cities.

The Dow Jones industrial average closed down just 2 points after staying in a narrow range all day. The S&P 500 index and the Nasdaq each eked out small gains.

In the latest sign of a bumpy recovery in the housing market, home prices fell in 19 of the 20 cities tracked by the Standard & Poor's/Case-Shiller index, which does not include Philadelphia. Atlanta, Detroit, and Minneapolis posted the biggest declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began.

That report dampened investors' enthusiasm about a jump in consumer confidence to the highest level since April. The New York-based Conference Board reported that its Consumer Confidence Index rose almost 10 points to 64.5 in December. Economists watch the numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity.

Henry Herrmann, chief executive officer at the investment-management firm Waddell & Reed, said the increase reflected the fact that more jobs had been created in recent weeks, which will likely lead to "a more sustained" economic recovery.

The Dow lost 2.65 points, or 0.02 percent, to close at 12,291.35. The S&P 500 was up 0.10 points, or 0.01 percent, to 1,265.43. The Nasdaq composite rose 6.56, or 0.3 percent, to 2,625.20.

The most the Dow rose during the day was 34 points, and the most it fell was 24. It was the narrowest trading range in five months.

Stocks are expected to move within a narrow range all this week between holidays. The volume of shares traded on the New York Stock Exchange on Tuesday was two billion, less than half the average daily volume this month.

Sears Holding Corp. plunged 27 percent, to $33.38, the most in the S&P 500. The retailer warned it would close between 100 and 120 Sears and Kmart stores after poor sales during the holidays, the most crucial time of year for retailers.

The Sears news also dragged Whirlpool Corp. down 9 percent, to $46.62. Investors worried the store closings would hurt sales of Whirlpool and Maytag washers and dryers.

A run of strong economic data in the United States has boosted the stock market in recent days. But analysts expect any gains to be tempered by worries over the European debt crisis.

Italy's borrowing costs rose Tuesday, reflecting a continued high level of investor anxiety. The yield on the country's 10-year bonds hit 7 percent again, which is considered unsustainable in the long run. Greece, Ireland, and Portugal had to seek relief from lenders after their own borrowing costs rose that high.

Italy is the eurozone's third-largest economy and is considered too big to be bailed out by its neighbors. Mario Monti, the country's new prime minister, got parliamentary approval last week for a big austerity package intended to save the country from financial disaster.

But markets have grown increasingly fearful that Italy will find it difficult to pay off its huge debts, which stand at about $2.5 trillion.