Market Insider

Retail stocks have their best day of the year, but that's not saying much

Key Points
  • XRT, the Sector SPDR retail ETF, saw its best day of the year, after Target's revised forecast raised hopes that a broad range of retailers are also seeing some improvement.
  • But the rally, putting several percent on a number of sector names, is just a minor dent in the big bashing the retail sector has seen this year.
  • Target rose more than 4 percent but its stock was still down about 27 percent for the year so far.
Here are the best names to buy on the retail bounce: Technician
Here are the best names to buy on the retail bounce: Technician

Retail stocks rallied in their best day of the year, after Target raised its second-quarter earnings forecast, boosting hopes that others in the sector are also seeing improvement.

But even with the one day of euphoria in some of the worst performing retail names, many major brick-and-mortar chains are still extremely depressed, having seen their market cap dissolve this year as shoppers move online. The XRT, the SPDR S&P Retail ETF, closed up 2.3 percent, its best day since Nov. 22.

J.C. Penney, for instance, jumped 7.8 percent Thursday, but its stock is down more than 40 percent year to date, and Macy's was up 4 percent but is down 37 percent since the start of the year.

Target stock closed up 4.8 percent to $53.31 per share, after it said it expects earnings above the high end of its previous forecast range, which was 95 cents to $1.15 per share. Target said it saw broad-based sales improvement in the second quarter, raising hopes that a range of other chain stores are also experiencing a rebound.

Target's jump bad for dept. stores: Pro4ma's Liz Dunn
Target's jump bad for dept. stores: Pro4ma's Liz Dunn

Even with the gain, Target's stock is still down 27 percent this year.

Wal-Mart, which rivals Target in many categories, was up just 1.5 percent. But unlike other retailers, its stock has been higher for the year, up about 8 percent. Wal-Mart has been benefiting from its acquisition of, giving it more ability to compete with Amazon.

Amazon, which has benefited at the expense of other retailers, saw a 0.7 percent decline in its stock Thursday but is up 33 percent year to date. Retail shares, under pressure all year, took another whacking after Amazon announced it was buying the Whole Foods Markets grocery chain last month.

Kroger, a grocery chain, rose just 0.5 percent in the big retail rally Thursday. Its stock is down 33 percent year to date.

Stocks in the XRT retail ETF performance Thursday