Strong sales send retail stocks soaring

— -- Shoppers may have been hitting the Internet hard for more deals on Cyber Monday, but investors didn't waste any time buying up retail stocks.

A rally in retailers' shares, following reports of strong initial holiday sales over the weekend, helped push stocks sharply higher to end the stock market's losing streak.

The SPDR S&P Retail exchange traded fund, which tracks the performance of retail stocks in the S&P 500, rose 3.4%. That beat the 2.6% rise by the Dow Jones industrial average to 11,523, which snapped a four-session losing streak.

"Black Friday numbers show the U.S. consumer is still happily spending despite reports of economic malaise," says Frederick Moran of research firm Benchmark. It's too soon to pronounce victory for retailers, though, and investors are zeroing in on:

•Successful late-night jump-start. Retailers that opened at midnight on Black Friday scored the biggest gains, says John D. Morris of BMO Capital.

The biggest beneficiaries of the twilight shopping were teen retailers. Shares of American Eagle Outfitters, Abercrombie & Fitch and Hot Topic rose 5.1%, 5.1% and 4.4%, respectively.

•Continued strength online. Shares of Amazon.com jumped 6.4%, making it the second-biggest percentage gainer among all the retailers in the S&P 500 after Netflix. The percentage of sales conducted online this Black Friday was higher than last year, Moran says.

•Relief things aren't as bad as they could be. Investors had been negative on retailers the past few months as they figured relatively high unemployment and foreign debt issues would be a drag, says Eric Beder of Brean Murray Carret.

Still, it's dangerous for investors to assume retailers' stocks are a bargain and Monday's rally will last. It remains to be seen if retailers can continue to pull in traffic after their heavy promotions wane, says Richard Jaffe of Stifel Nicolaus.

There's also concern retailers' profit might take a big hit from the heavy discounting being done, says Jaime Katz of Morningstar. One good weekend doesn't mean investors should jump in.

"Getting lots of traffic on Black Friday is not an investment thesis," Jaffe says.