Topsy-turvy day on Wall Street

NEW YORK (CNNMoney.com) -- Stocks turn mixed Wednesday afternoon, as investors fought back from a steep midday selloff, but remained on edge amid worries about the fallout from the subprime mortgage market.

The Dow Jones industrial average (down 34.69 to 12,041.27, Charts) lost 0.3 percent with two hours left in the session, after briefly falling below 12,000 for the first time since November of last year.

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The broader S&P 500 (down 0.81 to 1,377.14, Charts) index and the Nasdaq (down 1.26 to 2,349.31, Charts) composite both saw smaller declines.

All three major gauges had seesawed in and out of the plus column throughout the session, briefly slumping more aggressively in the early afternoon before clawing back by the mid afternoon.

In general, "we've gone from a very optimistic market a month ago to a skeptical market and I don't think this will be over quickly," said Robert S. Gay, managing partner at Fenwick Advisors. "I think we're going to see this for several months."

The Dow hit an all-time high less than a month ago, topping out at just under 12,800 on Feb. 20, during the session, before closing at 12,786.64. But analysts say the blue-chip barometer is unlikely to revisit that high anytime soon.

Stocks were also a bit volatile Wednesday in the lead up to Friday's quadruple options expiration, a quarterly event in which stock index futures and options and individual stocks futures and options all expire at the same time, causing volatility in the underlying issues.

All three major gauges tumbled about 2 percent Tuesday as worries about subprime lending and the economy sparked the second worst selloff of the year.

The worries continued to play a role Wednesday as investors remained concerned about how badly problems with subprime loans - made to borrowers with weak credit - will hurt the already troubled housing market and by extension, the economy. Subprime lenders have seen a spike in defaults on loans.

A few subprime stocks bounced back after Tuesday's selloff, including Accredited Home Lenders (up $0.66 to $4.63, Charts), which slumped 65 percent on Tuesday.

But the broader concerns about the sector remained a drag on the market, particularly with more companies talking about the impact.

Dow component GM swung to a profit that was nonetheless short of Wall Street estimates. The world's biggest automaker said that while its North American operations recovered, the problems with subprime mortgage lending hit its finance unit. GM (down $0.57 to $29.94, Charts) shares slipped about 2.5 percent.

Lehman Brothers reported higher quarterly earnings that topped estimates as strength in equity markets tempered any fallout from subprime. But Lehman (down $1.25 to $70.75, Charts) shares slipped 5 percent nonetheless.

A variety of airline, railroad and trucking stocks slumped, dragging down the Dow Jones Transportation (down 73.12 to 4,653.44, Charts) average by 1.4 percent.

On the upside, Qualcomm (up $1.23 to $43.06, Charts) rose again one session after the wireless telecom provider boosted its second-quarter earnings and revenue outlook. On Wednesday, JP Morgan upgraded the stock, Briefing.com reported.

Other big tech gainers included Oracle (up $0.19 to $16.84, Charts) and Microsoft (up $0.37 to $27.09, Charts).

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers 3 to 2 on volume of 950 million shares. On the Nasdaq, losers beat winners 2 to 1 on volume of 1.05 billion shares.

Investors also eyed a morning report that showed that the fourth-quarter current account deficit narrowed more than expected.

U.S. light crude oil for April delivery rose 22 cents to $58.15 a barrel on the New York Stock Exchange, seesawing after a mixed weekly oil inventories report.

COMEX gold for April delivery fell $6.10 to $643.30 an ounce.

Treasury prices reversed course, turning higher, lowering the yield on the 10-year note to 4.48 percent from 4.49 percent late Tuesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slumped versus the euro and the yen, giving up early gains.

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Home prices: No quick rebound

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