Corrected: Consumer shares lift Wall St on Target

By Angela Moon

NEW YORK (Reuters) - Wall Street rose on Wednesday, led by gains in consumer stocks after a reassuring sales forecast from discounter TARGET (TGT.NY)Corp fueled optimism about the retail industry.

The Target same-store sales forecast came a day after retail companies Wal-Mart Stores and Home Depot reported higher-than-expected earnings.

Shares of Target gained 3 percent to $52.51 after the discounter forecast a continuous growth in same-store sales, signaling that it may even beat larger rival Wal-Mart.

"Deflation worries are what's been really pressuring the market. But the news from Target today, on top of Wal-Mart and Home Depot, is saying that we may not be in such a bad situation," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The consumer discretionary sector <.GSPD> gained 1.3 percent, the biggest gainer among the S&P 500 sectors.

But volume continued to be low as economic uncertainty discouraged investors from adding to stock positions. With less than one hour left in trading, volume was about 1 billion shares below the year's lightest day so far.

The Dow Jones industrial average <.DJI> was up 39.81 points, or 0.38 percent, at 10,445.66. The Standard & Poor's 500 Index <.SPX> was up 5.11 points, or 0.47 percent, at 1,097.65. The Nasdaq Composite Index <.IXIC> was up 14.13 points, or 0.64 percent, at 2,223.57.

CBOE Volatility index <.VIX>, Wall Street's favorite yardstick for investor anxiety, was down 2.7 percent at 23.68, but options analysts said the market remains unstable.

Randy Frederick, director of trading and derivatives for Charles Schwab, said in a note that the intraday volatility pattern "is still very much alive."

"Until we get a clear sentiment shift, the markets are still catering mostly to those with a very short-term trading bias, or a very long-term perspective. For everyone in between, the gut-wrenching could continue for awhile," he said.

But warehouse club operator BJ's cut its earnings forecast for the year, sending shares down 2.8 percent at $42.11.

Farm equipment maker Deere & Co fell 2.6 percent to $65.51 after it beat estimates but said sales were "far below normal levels".

On the Nasdaq, Cisco Systems rose 2 percent to $22.48, helping the tech heavy index.

Analog Devices Inc rose 4.9 percent to $30.22 a day after the microchip maker posted a quarterly profit that topped estimates and issued a better-than-expected fourth-quarter outlook.

(Reporting by Angela Moon, Editing by Kenneth Barry)

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