Retail shares soared on Thursday after investors received some good news about the bond insurance industry as well as a bullish report from Deutsche Bank, sending the S&P Retail Index up a whopping 4.4 percent to 423.16.
The Dow Jones Industrial Average grew 1.5 percent to 12,634.02, while the broader S&P 500 increased 1.7 percent to end the day at 1,378.55.
Rebounds came despite earlier announcements of weak consumer spending data and an increase in jobless claims.
Department stores and discounters got a boost after Deutsche Bank upgraded the sector to "Neutral" from "Cautious." As a result, shares of Sears Holdings Corp. grew 5.2 percent to $110.49, J.C. Penney Co. Inc. increased 5.9 percent to $47.42 and Kohl's Corp. rose 5.8 percent to close at $45.62.
Retail giant Wal-Mart Stores Inc. climbed 3.3 percent to $50.79, while rival Target Corp. swelled 5.7 percent to $55.36.
"We are feeling incrementally better about our broadlines retailing stocks and while there are likely two or three more negative data points ahead which could cause the group to underperform for the next few months, we believe the worst will soon be behind us," said William Dreher, research analyst at Deutsche Bank.
While Dreher said investors should stick with defensive stocks such as CVS Corp. and Wal-Mart, he believes Kohl's and Macy's Inc. will do well going forward.
Teen retailer Aéropostale Inc. rose 7.7 percent to $28.13, after the company announced an extension of its contract with chairman and chief executive officer Julian Geiger until 2011.
J. Crew Group buoyed 9.5 percent to $45.66, while action sports apparel retailer Zumiez Inc. grew 8 percent to $19.23.
After announcing a restructuring program, which will include closing 117 underperforming stores, shares of AnnTaylor Stores Corp. climbed 9.9 percent to close at $25.09.
Other women's retailers also saw notable gains. Chico's FAS Inc. soared 13.4 percent to $10.81, Christopher & Banks Corp. increased 5.7 percent to $12.84, New York & Company Inc. grew 8.4 percent to $5.55, Talbot's Inc. shot up 8.1 percent to $9.61 and Coldwater Creek Inc. flew 12.2 percent to close at $6.42.Shares of men's retailers, a sector many fear will be the first to cut back if a recession hits, made big strides. Jos. A. Bank Clothiers Inc. ascended 14.2 percent to $27.24, while The Men's Wearhouse Inc. escalated 7.9 percent to $25.59.
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