Stocks Rise on Takeover Bid, Apple Upgrade

Stocks rose Tuesday as investors welcomed better-than-expected retail sales data, a takeover bid on Circuit City and an upagade of Apple, but volume was light ahead of Federal Reserve Chairman Alan Greenspan's (search) congressional testimony Wednesday.

Based on the latest available data, the blue-chip Dow Jones industrial average (search) was up 45.67 points, or 0.42 percent, to end at 10,836.80. The broad S&P 500 (search) index was up 3.94 points, or 0.33 percent, to finish at 1,210.08. The tech-laced Nasdaq Composite Index (search) was up 6.30 points, or 0.30 percent, to close at 2,089.21.

Investors were looking ahead to Greenspan's testimony to Congress Wednesday and Thursday. What Greenspan says about the U.S. economy and monetary policy will get extra scrutiny from investors as they search for clues about the Fed's thinking about inflation and the pace of future interest-rate increases.

"I think the market is so comfortable about what's coming out of the Fed, that maybe we need more of a shake-up, because I think we're in a groove in terms of expectations about what the Fed's going to do," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Wealth Management.

"Greenspan has a history of using this meeting to try to curb the market," said Bill Groenveld, head trader for vFinance Investments. "I wouldn't be surprised if you end up seeing him making a statement that we weren't expecting. The way long-term rates are going, he may have to shake things up a bit."

Shares of struggling electronics retailer Circuit City (CC) jumped 16.2 percent, or $2.30, to $16.53 after receiving a $3.25 billion unsolicited takeover offer from Highfields Capital Management LP, a ptalk about which other companies could be targeted, is positive for stocks as it indicates a gener percent.

Advances in 3M Co. (MMM) also helped lift blue chips, a day after the diversified manufacturer said it would boost its dividend 17 percent. The stock was up 1.6 percent, or $1.38, at $85.99. United Technologies Corp. (UTX), another Dow stock, rose 1.5 percent, or $1.47, to $102.77.

Tech shares got a lift from a 4.5 percent gain in Apple Computer Inc.(AAPL), the maker of the iPod portable music player. The stock rose $3.78 to $88.41 on Nasdaq after brokerage Merrill Lynch raised its 12-month price target to $102 from $85. Earlier, the stock hit a fresh all-time high of $89.08.

U.S. retail sales, excluding the volatile auto sector, gained a healthy 0.6 percent in January, a government report showed. Analysts polled by Reuters had expected that figure to rise 0.4 percent, just above the increase of 0.3 percent in December.

But talks between Federated Department Stores Inc. (FD) and May Department Stores Co. (MAY) have broken down, according to The Wall Street Journal, after the two could not agree on a final price for May. Shares of May rose 19 cents to $32.05, while Federated rose 75 cents to $58.

Cable companies' shares rose following positive comments from Banc of America Securities. The brokerage firm said the cable sector should benefit from the recent spate of telecommunications consolidation. Shares of Comcast Corp. (CMCSA) rose 3.4 percent, or $1.05, to $32.36 and the stock of Time Warner Inc. (TWX) gained 1.4 percent, or 25 cents, to $18.10.

Qwest Communications International Inc. (Q) added 6 cents to $4.04 after the telecom company reported a narrower-than-expected fourth-quarter after the telecom company reported a narrower-than-expected fourth-quarter loss. The company credited stronger broadband Internet sales and sales of bundled products for the improvement. The company did not discuss any merger or acquisition plans after its failed bid for MCI Inc.

Medco Health Solutions Inc. (MHS) said increased use of generics and mail-order offers helped the pharmacy benefits manager cut costs and increase fourth-quarter profits. The company beat Wall Street estimates by 2 cents per share. Medco was up 89 cents to $44.69.

Overall, trading was active, with 1.53 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 2.1 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by 6 to 5 while decliners outnumbered advancers by about 16 to 15 on Nasdaq.

The Russell 2000 index of smaller companies was down 0.08, or 0.01 percent, at 634.94.

Overseas, Japan's Nikkei stock average rose 0.12 percent. In Europe, Britain's FTSE 100 closed up 0.34 percent, France's CAC-40 climbed 0.46 percent for the session, and Germany's DAX index gained 0.36 percent.

Reuters and the Associated Press contributed to this report.