Retail stocks have been surging lately, given their improving financials and bullish market sentiment amid the economic recovery. This trend is likely to continue in the near term, backed by continued progress on the vaccination front and rising consumer spending. Shares of The Gap (GPS), DICK’S Sporting Goods (DKS), and Urban Outfitters (NASDAQ:URBN) are poised to maintain this momentum in the near term. The fast-paced revival of the US economy and ease of social distancing mandates with continued progress on the vaccination front have been resulting in rising foot traffic in retail stores, as people are preferring physical stores over online platforms for their shopping needs. National Retail Federation (NRF) expects retail sales to grow between 10.5% and 13.5% to an estimated total of $4.44 trillion to $4.56 trillion in 2021.

The macroeconomic trends are driving investors to bet on retail stocks lately, as the pent-up demand and rising consumer spending are driving revenues of retailers. The strong investor interest in the retail industry can be observed from the S&P Retail Select Industry Index’s 45.4% gain year-to-date. This compares with the broader S&P 500 index’s 12.4% return.

As the country is on track to vaccinate at least 70% of its population within July 4, retail stocks should continue to rally. Shares of popular retailers The Gap, Inc. (GPS), DICK’S Sporting Goods, Inc. (DKS), and Urban Outfitters, Inc. (URBN) have gained strong momentum lately and we don’t expect their momentum to end anytime soon.

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