The S&P 500 closed at a five-month high for the third day on Thursday but had difficulty extending gains in the face of lackluster economic data and another European bond market test.

Energy shares curbed gains after Chevron Corp , the second-largest U.S. oil company, said fourth-quarter profit would be far below the previous quarter. Chevron slid 2.6 percent to $104.97, making it the biggest drag on the Dow, while the S&P energy index <.GSPE> fell 0.9 percent and was the biggest decliner among S&P sectors.

In its fourth day of gains, the S&P 500 has risen 1.4 percent, but it's added only 0.3 percent since Tuesday as investors look for more convincing evidence of an improving U.S. economy, solid corporate earnings and progress toward resolving the euro zone's debt crisis.

Analysts also pointed to technical resistance near the 1,300 level.

We may be stuck in neutral because you have two very strong forces opposing one another. You have fundamentals that are not particularly fantastic at the present moment, with a market that wants to project out a year or so and do a little bit better, said Doreen Mogavero, CEO of Mogavero, Lee & Co. in New York.

The divergence of opinions on where this market is going is balancing us out and we are sort of stuck.

The Dow Jones industrial average <.DJI> gained 21.57 points, or 0.17 percent, to 12,471.02. The Standard & Poor's 500 Index <.SPX> added 3.02 points, or 0.23 percent, to 1,295.50. The Nasdaq Composite Index <.IXIC> rose 13.94 points, or 0.51 percent, to 2,724.70.

Investors will look to earnings from JPMorgan Chase & Co , the first of the major U.S. banks to report earnings, on Friday for signs the banking sector's recent gains are justified. The KBW Bank Index <.BKX> is up nearly 11 percent for the year.

You need three groups to really push this market through - you need the financials, you need technology and you need energy, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

They are not really going to go heavily into the financials until we get JPMorgan out of the way tomorrow morning, then we will get Goldman Sachs after that, and we will get a feel for whether the earnings are enough to push us through.

On the euro-zone front, Spanish and Italian government bond yields fell as solid auctions for government debt in the two countries were an encouraging sign for investors, who will brace for another Italian bond sale on Friday.

But U.S. retail sales rose at the weakest pace in seven months in December and first-time claims for jobless benefits moved higher last week, denting optimism about the U.S. recovery after a string of upbeat economic data.

Among individual stocks, shares of Multi-Fineline Electronix Inc surged 18 percent to $25.40 after preliminary quarterly net sales for the maker of circuit boards for electronics came in better than expected.

Wynn Resorts Ltd slipped 1.9 percent to $109.80 after Vice Chairman Kazuo Okada, who is also a major shareholder, sued the casino operator, claiming it was blocking his attempts to review business accounts despite repeated requests.

Volume was modest, with about 6.66 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly below the daily average of 6.7 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,820 to 1,147, while on the Nasdaq, advancers beat decliners 1,524 to 957.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)