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) 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) 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) 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), which rose 2% to $21.45, Home Depot ( HD), , which increased 1.8% to $27.53, Saks ( SKS), which inclined 2% to $6.35, Abercormbie & Fitch ( ANF), which shot up 2% to $36.36 and Rite Aid ( RAD), which got a 2.7% boost to close at $1.55.

There are some losers, however, the biggest of which is Buckle ( BKE), 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

Follow TheStreet.com on Twitter and become a fan on Facebook.

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 This material may not be published, broadcast, rewritten, or redistributed.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

More from Opinion

Tesla's Profit Warning Reignites a Big Investor Debate Over the $35,000 Model 3

Tesla's Profit Warning Reignites a Big Investor Debate Over the $35,000 Model 3

Did Tesla Fire 7% of Its Workforce to Pay for a Factory in China?

Did Tesla Fire 7% of Its Workforce to Pay for a Factory in China?

Takeaways for Apple, Intel and Others from Taiwan Semi's Earnings and Guidance

Takeaways for Apple, Intel and Others from Taiwan Semi's Earnings and Guidance

Rules for TheStreet's Contests

Rules for TheStreet's Contests

Netflix's Big Price Hike Could Add More Than $1 Billion to Its Annual Revenue

Netflix's Big Price Hike Could Add More Than $1 Billion to Its Annual Revenue