Stocks cling to advance
Major gauges trim gains after Greenspan's comments but remain higher, building on previous session's run.
NEW YORK (CNNMoney.com) -- Stocks trimmed gains Thursday afternoon after former Federal Reserve Chairman Alan Greenspan said that the problems with subprime mortgages could spill over to other sectors, but added that a 10 percent rise in home prices could stop the problems.
The Dow Jones industrial average (down 0.24 to 12,133.16, Charts) and the broader S&P 500 (up 2.71 to 1,389.88, Charts) index both added a few points with about two hours left in the session. The Nasdaq (up 0.18 to 2,371.92, Charts) composite was little changed.
Stocks bobbed above and below the unchanged line all session, losing some steam after the noon release of the Philadelphia Fed index, a regional read on manufacturing and then again after Greenspan's comments, before bouncing back.
Stocks rose Wednesday at the end of a volatile day in which investors wrestled with the subprime mortgage crisis.
Trading Thursday was also jumpy, and expected to remain so ahead of Friday's quadruple options expiration, a quarterly event when stock index futures and options and individual stock futures and options all expire at the same time.
After the big selloff two weeks ago, stocks have been "in a grinding trading range," said Douglas Roberts, managing principal at Channel Capital Research Institute. He said that choppiness is likely to continue over the next few months.
A recovery in financial stocks after the recent subprime-related scare has been helping the market in recent sessions, particularly after the recent battering.
Over the last 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 $4.06 to $10.10, Charts) and NovaStar Financial (up $1.05 to $5.23, Charts) have been hit hard on such worries. But offsetting that has been some reassuring words from some of the bigger banks.
"The larger financial firms are OK and the contagion seems to be contained," Roberts said.
Bear Stearns (up $2.60 to $147.89, 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.
In other news, General Motors (down $0.50 to $29.75, 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 deals news, Cisco Systems (down $0.06 to $25.79, Charts) said it was buying WebEx (up $10.21 to $56.41, Charts), which makes online collaborative software, for about $3.2 billion. WebEx shares jumped 22 percent.
Additionally, InternationalExchange (down $4.65 to $127.28, 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 $28.90 to $535.07, Charts).
Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 2 to 1 on volume of 970 million shares. On the Nasdaq, advancers topped decliners by four to three on volume of 1.14 billion shares.
Inflation measure rises
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 rose 4 cents to $58.20 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, little changed from late Wednesday.
In currency trading, the dollar gained versus the yen and fell versus the euro.