Retail stocks were bolstered by Sears Holding Corp., which shot up 9.5 percent to $36.75 as investors chased rumors that the company was a takeover target.
Sears, which is led by chairman Edward S. Lampert, has come under the Wall Street microscope in recent weeks as it reported weak holiday results, laid out a plan to close stores and saw factor CIT pull its vendor financing.
It is unclear how likely a takeover target Sears makes since Lampert already has solid control of the firm. Sears posted total revenues of $43.33 billion last year. The company, which includes both Kmart and the namesake chain, has a current market capitalization of $3.93 billion. Its enterprise value, which includes the value of all the company's stock and its debts, weighs in at $7.51 billion.
The rally helped support the sector. The S&P Retail Index rose 1.1 percent, or 5.64 points, to 539.20, as the Dow Jones Industrial Average gained 0.5 percent, or 60.01 points, to 12,482.07. Among the other Wall Street gainers were Michael Kors Holdings, up 5.6 percent to $28.05; Limited Brands Inc., 1.7 percent to $41.19; Vera Bradley Inc., 1.6 percent to $34; Charming Shoppes Inc., 1.5 percent to $4.72 and Oxford Industries Inc., 1.5 percent to $48.05.
In Europe, markets continued to rise with indices across the region registering gains.
The FTSE 100 in London rose 0.7 percent to 5,693.95, the CAC 40 in Paris gained 1.4 percent to 3,269.99, while the DAX in Frankfurt rose 1.9 percent to 6,332.93 and the FTSE MIB in Milan was up 0.7 percent to 15,325.98.
Most fashion and luxury stocks mirrored the gains. Carrefour rose 2.4 percent to 16.99 euros, Marks & Spencer was up 1.4 percent to 3.20 pounds and Yoox jumped 3.2 percent to 8.65 euros. Burberry, meanwhile, rose a slight 0.1 percent to 13.01 pounds, following a 22 percent rise in its third quarter revenues.
The pound traded for $1.53 Tuesday, while the euro traded at $1.27.
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