Stocks struggle to stay higher

NEW YORK (CNNMoney.com) -- Stocks attempted to hold onto early gains Wednesday afternoon amid renewed subprime fears while investors awaited the latest quarterly earnings.

The Dow Jones industrial average (up 33.41 to 13,535.11, Charts) climbed over 0.3 percent with an hour remaining in the session. The broader S&P 500 (up 2.92 to 1,513.04, Charts) rose over 0.2 percent while the tech-fueled Nasdaq (up 3.61 to 2,642.77, Charts) moved 0.2 percent higher.

Despite the lack of any major economic reports or quarterly results, investors saw Tuesday's selloff, which sent the Dow 153 points, as a buying opportunity.

"There's still a lot of money still wants to get in the market," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds.

Wall Street will get a few results after the market close Wednesday, as the biotech firm Genentech Inc. (up $0.80 to $75.65, Charts) and fast-food giant Yum Brands Inc. (up $1.68 to $34.63, Charts, Fortune 500) are both set to report quarterly results.

U.S. markets plunged Tuesday on rising oil prices, a handful of profit warnings and after credit rating agencies Standard & Poor's and Moody's downgraded securities backed by subprime mortgages.

The action taken by the ratings firms raised worries that problems in the subprime mortgage sector, which gives home loans to borrowers with poor credit, could further depress the housing sector and spillover to the broader economy.

Philadelphia Federal Reserve Bank President Charles Plosser offered some encouragement Wednesday, saying that banks appear to be holding up well despite the recent woes in the subprime sector, but said that the situation requires further monitoring.

In major corporate news, Gerdau AmeriSteel (down $1.25 to $14.44, Charts), the U.S. unit of Brazilian steelmaker Metalurgica Gerdau, agreed to buy rival Chaparral Steel in a cash deal worth $4.2 billion. Chaparral Steel (up $7.98 to $83.67, Charts) shares soared over 10 percent on the Nasdaq.

Shares of SLM Corp. (down $6.04 to $51.76, Charts, Fortune 500), the parent company of student lender Sallie Mae, plunged over 10 percent after the company said its previously agreed $25 billion takeover offer could get derailed due to legislative proposals.

Alcan (up $3.25 to $89.39, Charts) shares climbed over 3 percent following reports that the aluminum producer has been in merger discussions with mining firm Rio Tinto (up $7.27 to $322.81, Charts) in an effort to ward off a hostile bid by rival Alcoa (up $0.51 to $42.17, Charts, Fortune 500).

Apparel company Liz Claiborne (up $0.33 to $37.56, Charts, Fortune 500) announced plans Wednesday to sell 16 of its 36 brands and cut up to 800 jobs. Liz Claiborne shares edged higher on the New York Stock Exchange.

Oil prices slipped just after the weekly report on U.S. fuel inventories showed a surprise decline in oil inventories and a bigger than expected increase in gasoline stocks. U.S. light crude for August lost 21 cents to $72.60 a barrel.

In the bond market, Treasury prices fell, lifting the yield on the 10-year benchmark note to 5.08 percent, up from 5.02 percent late Wednesday.

The dollar fell to a record low against the euro for the second-straight session amid continued subprime worries, while the dollar edged lower against the yen.

Market breadth was negative. Decliners edged out advancers on the New York Stock Exchange on volume of 1.12 billion shares. Losers barely beat winners on the Nasdaq on volume of 1.48 billion shares.

COMEX gold for August fell $2.30 to $662.10 an ounce.