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, 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. 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 - 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

Follow on Twitter and become a fan on Facebook.

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 This material may not be published, broadcast, rewritten, or redistributed.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