Potential Takeovers, Bargains Spur Buying

Blue-chip stock indexes posted their first gains of the year Thursday as bargain hunters swooped in after the recent sell-off and traders reacted to reports of potential corporate takeovers.

Shares of Western Wireless, which sells mobile services in 19 states under the Cellular One brand, and Unocal, last year’s worst-performing oil company in the Standard & Poor’s 500 index, climbed on news reports that the companies might be bought.

The S&P; 500’s 2.3% drop in the year’s first three sessions also attracted buyers looking for a rebound.

“We had a little bit of a snap-back from the losing streak,” Giri Cherukuri, head trader at Oakbrook Investments in Lisle, Ill., told Reuters. “People were a little surprised the market started the year that way.”

The Dow Jones industrial average climbed 25.05 points, or 0.2%, to 10,622.88, breaking a six-day skid, and the broader S&P; 500 added 4.15 points, or 0.4%, to 1,187.89, although both indexes lost steam late in the day.

The technology-heavy Nasdaq composite index fell 1.24 points, or 0.1%, to 2,090. after trading in positive territory earlier in the session.

Three stocks rose for every 2 that fell on the New York Stock Exchange, while advancers and decliners ran about even on Nasdaq. Trading was active.

Before Thursday, the benchmark S&P; 500 had gotten off to its worst start since 2000, when it lost 4.6% to begin the year. The S&P; 500 ended that year down 10% as a three-year bear market got underway.

Concern that the Federal Reserve may step up the pace of interest-rate increases and profit taking in the wake of last year’s gains has weighed on share prices this week. Minutes from the Fed’s Dec. 14 meeting disclosed that policymakers saw interest rates as too low to curtail inflation.

Optimism that today’s jobs report from the Labor Department won’t give the central bank more reason to cool the economy contributed to Thursday’s rebound, however. Economists are looking for an increase of 175,000 workers to payrolls in December from 112,000 in November, according to the median estimate in a Bloomberg News survey.

Western Wireless rallied $4.70 to $35.70. Alltel, the sixth-largest U.S. wireless company, may buy Western Wireless for $4 billion, people familiar with the matter said. Alltel shares slid $2 to $56.

Unocal advanced $3.15 to $44.34. China National Offshore Oil, China’s third-biggest oil company, is considering a bid of more than $13 billion for Unocal, the Financial Times said, citing people familiar with the talks.

In other trading, crude oil futures rose sharply, surging past the $45-per-barrel mark, one day after the Energy Department reported strong inventories of distillate fuels but a decline in crude reserves. A barrel of light crude fetched $45.56 on the New York Mercantile Exchange, versus $43.39 on Wednesday.

The dollar gained against the euro for the fifth straight session, its longest rally in more than a year, on optimism that faster U.S. job growth will bolster the case for higher interest rates. The euro ended at $1.317, from $1.326.

In other equity highlights:

* Guitar Center surged $5.15 to $56.65 after the retailer said fourth-quarter profit would exceed expectations. Other retailers gaining on better-than-expected sales included AnnTaylor Stores, up $2.55 to $23.14 and Abercrombie & Fitch, which rose $2.65 to $50.12.

* Disappointing results hurt Target, which lost $2.78 to $48.50 and Kmart Holding, which dropped $2.28 to $94.29.