NEW YORK (

TheStreet

) -- Retail shares rallied on Tuesday, as October sales are starting off with a bang.

Sales for the first full week of October inched up 0.6%, and on a year-over-year basis rose 1%, according to the International Council of Shopping Centers and Goldman Sachs.

"Slowly, but surely, the underlying sales performance is inching higher," Michael P. Niemira, ICSC chief economist said in a statement. "The trend improvement is providing evidence that the retail sector recovery is starting to unfold."

ICSC expects sales for the month to be flat, with some upside potential.

The S&P Retail Index ended the day up 0.9% to 391.23, led by

Pacific Sunwear of California

(PSUN)

.

The teen retailer was upgraded to outperform by FBR Capital Markets analyst Adrienne Tennant, who said better product focus and easier year-ago comparisons could be appealing for long-term investors.

Shares of Pacific Sunwear spiked 5.5% to close at $6.48.

Macy's

(M) - Get Report

also inched up 0.6% to $19.74 after an analyst raised his price target and earnings estimates.

JP Morgan analyst Charles Grom expects the department store to reports third-quarter loss between 3 cents and 5 cents a share, up from his prior forecast of a loss of 9 cents. He also raised his price target to $19 from $17.

He attributed his more optimistic outlook to the company's better-than-expected September same-store sales. Macy's posted a 2.3% slip during the month, surpassing the 4.6% decline analysts expected.

Shares of Macy's are increasing 1.6% to $19.94.

Wal-Mart Stores

(WMT) - Get Report

grew 1.5% to $50.34 after it announced it will offer health and beauty items online that can be delivered.

A little over a year ago, shoppers could only browse grocery, health and beauty products at Walmart.com, not make a purchase. Now they purchase thousands of these items of the site.

Rival

Target

(TGT) - Get Report

also revealed its newest offering on Tuesday: instant access to publications for e-reading devices on its new digital newsstand site.

Target.zino.com features digital versions of popular U.S. and international single-issue, subscription and archived issues at discounted prices.

Shares of the discounter arended the day up 1% to $50.11.

Other notable gainers include

Lowe's

(LOW) - Get Report

, which rose 2% to $21.45,

Home Depot

(HD) - Get Report

, , which increased 1.8% to $27.53,

Saks

(SKS)

, which inclined 2% to $6.35,

Abercormbie & Fitch

(ANF) - Get Report

, which shot up 2% to $36.36 and

Rite Aid

(RAD) - Get Report

, which got a 2.7% boost to close at $1.55.

There are some losers, however, the biggest of which is

Buckle

(BKE) - Get Report

, which tumbled 5% to close at $33.22.

Other decliners are:

RadioShack

(RSH)

, which fell 2% to $15.81 and

Walgreen

(WAG)

, which was off 1.8% to end the day at $38.27.

-- Reported by Jeanine Poggi in New York

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Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.