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Abercrombie & Fitch Company

Deal-seeking investors push retail stocks higher

Investors are snatching up shares of retailers as a more complex picture of the U.S. consumer emerges, one in which some brands may emerge as winners this year.

Just one week ago it appeared that the sector might be in for a universally dismal holiday shopping season after gloomy earnings reports were issued by blue-ribbon retailers like Macy's and Nordstrom. Both companies cut their outlook for the year and said markdowns were on the way to clear loads of excess inventory.

But there was a raft of stronger reports from retailers ranging from Abercrombie & Fitch to Foot Locker, and indexes that track retail shares have had a surge this week that has surpassed any in the...