Stocks gain, Day 2

NEW YORK (CNNMoney.com) -- Stocks rose for a second straight day Thursday, finding momentum at the end of a volatile session, despite former Federal Reserve Chairman Alan Greenspan's concerns that the problems with subprime mortgages could spill over to other sectors.

The Dow Jones industrial average (up 24.60 to 12,158.00, Charts) gained 0.2 percent. The broader S&P 500 (up 5.31 to 1,392.48, Charts) index rose nearly 0.4 percent, while the tech-heavy Nasdaq (up 6.56 to 2,378.30, Charts) composite added 0.3 percent.

Stocks bobbed above and below the unchanged line earlier in the session, losing some steam after the midday release of the Philadelphia Fed index, a regional read on manufacturing, and then again after Greenspan's comments, before bouncing back with the help of falling oil prices.

Adding to the volatility was the quadruple options expiration on Friday, a quarterly event when stock index futures and options and individual stock futures and options all expire at the same time.

Art Hogan, chief market strategist at Jefferies & Co., said that the choppiness is likely to continue at least until the Federal Reserve meets next week.

"We'll have to see what kind of commentary we get out of the statement," Hogan said. "That will be a big driver of the markets next week."

Over the past few weeks, investors have been worried that 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.

Companies such as Accredited Home Lenders (up $3.44 to $9.48, Charts) and NovaStar Financial (up $0.97 to $5.15, Charts) have been hit hard on such worries. But offsetting that have been some reassuring words from some of the bigger banks.

Bear Stearns (up $3.03 to $148.32, Charts) reported higher quarterly earnings Thursday and said that the fallout in the subprime mortgage industry had only a limited impact on its financial performance.

Competitor Lehman Brothers (up $1.24 to $72.96, Charts) reported strong results Wednesday and also downplayed the impact from subprime.

Here's what was moving near the close:

Dow component General Motors (down $0.85 to $29.40, Charts) warned about accounting problems, saying that its internal controls over financial reporting are ineffective and could make it hard for the company to execute its business plan.

In merger news, Cisco Systems (down $0.05 to $25.80, Charts) said it was buying WebEx (up $10.17 to $56.37, Charts), which makes online collaborative software, for about $3.2 billion. WebEx shares jumped 22 percent.

Additionally, InternationalExchange (down $3.66 to $128.27, Charts) made a surprise $9.9 billion bid for CBOT Holdings (Charts), although the options market operator is already in the late stages of combining with the Chicago Mercantile Exchange (down $29.75 to $534.22, Charts).

And CVS (up $0.95 to $33.26, Charts) shareholders voted to approve a $26.5 billion bid for Caremark Rx Inc. (up $1.68 to $62.76, Charts).

Market breadth was positive. On the New York Stock Exchange, winners beat losers by nearly 3 to 1 on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners by 3 to 2 on volume of 1.7 billion shares.

The Producer Price Index (PPI), released early Thursday, jumped 1.3 percent in February after falling 0.6 percent in January. The report's inflation component, the so-called core PPI - which strips out food and energy - rose 0.4 percent after rising 0.2 percent in January. Both overall and core PPI were well above forecasts.

The report was a cause of concern ahead of next week's Federal Reserve policy meeting. However, Friday's Consumer Price Index (CPI) is more closely watched by the central bank.

A separate report early Thursday showed a big drop in manufacturing in the New York region. The NY Empire State Manufacturing index fell to 1.9 in March from 24.4 in February, versus forecasts for a drop to 17.0.

A report on manufacturing in the Philadelphia region, released around noon, also showed surprising weakness. The Philadelphia Fed index fell to 0.2 from 0.6 in February. Economists thought it would rise to 3.5. Anything above zero indicates expansion.

U.S. light crude oil for April delivery fell 61 cents to $57.55 a barrel on the New York Mercantile Exchange.

Treasury prices were little changed, with the yield on the 10-year note holding at about 4.53 percent, similar to its rate late Wednesday.

In currency trading, the dollar gained versus the yen and fell versus the euro.

Subprime: the risk to Wall Street

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