What happened

One day after the Dow Jones Industrial Average gained more than 11% and the S&P 500 surged by 9.4%, both indices are running with the bulls again on March 25. One sector in particular is seeing huge gains: Consumer discretionary goods-focused retailers are surging. Here are six of the biggest winners on the day. 

Retailer Stock Price Change on 3/25/20
Foot Locker (FL -2.02%) 5.8%
Kohl's (KSS -0.14%) 6.4%
Lowe's (LOW -1.06%) 8.3%
Macy's (M 13.55%) 16.8%
Gap (GPS 0.84%) 10.5%
Williams-Sonoma (WSM 0.43%) 3.3%

Data source: Yahoo! Finance. 

While some have cooled off a little bit, all six were up more than 10% at some point earlier in the trading session. 

So what

Today's big gains are mainly the result of news that Congress is very close to finalizing legislation that would provide some $2 trillion in economic relief for businesses, as well as sending cash directly to individuals. With the U.S. economy expected to fall sharply into recession -- economists are saying we may already be there now -- investors have experienced one of the quickest stock market declines in the past half-century, with retailers that sell mainly discretionary goods some of the biggest losers. 

A man holds a toy rocket emitting smoke.

Image source: Getty Images.

The aforementioned companies are prime examples. Even after today's bounce, their stocks have are still down between 32% for Lowe's and 64% for Macy's. Investors seem to be expecting that the government's economic stimulus plan will soften the blow from efforts to stem the spread of COVID-19. 

Now what

After losing more than 30% of its value in barely a month, stocks have rallied hard and fast the past two days. Optimism that the U.S. government would act aggressively to help support the economy has all the momentum for now. 

With that said, we still haven't seen a single jobs report, and it will be weeks before the first viable economic data is available. But what we do know is that cases of COVID-19 are rising sharply, and medical experts caution that it could be weeks before we see any slowdown in the spread. 

To put it bluntly, as nice as the rally investors have seen the past couple of days has been -- and frankly it's not a bad idea to celebrate, if even a little bit -- we should also be realistic. The next few weeks and months could be far more painful as efforts to contain the pandemic continue. And that could mean more great days like today, but also days where shares fall by double digits too.

But when we look beyond the current environment, things will eventually return to normal, whether it's later this year or the next. And when that happens, investors who took the opportunity to buy during the downturn will be winners. Even after a couple of big days, every retailer stock on this list is still down 30% or more. I think they all represent attractive investments as long as you're willing and able to hold for years.