What happened

Investors were in a buying mood on Wednesday, as state and local authorities continued to ease coronavirus-related restrictions and after a May jobs number came in better than analysts had expected. 

The developments add to a growing sense that the U.S. economy is rebounding, and many hard-hit consumer discretionary retail stocks had a good day on Wednesday.

  • Bed Bath & Beyond (NASDAQ:BBBY) closed at $8.08, up 7%.
  • Designer Brands (NYSE:DBI) closed at $7.78, up 16.8%.
  • Gap (NYSE:GPS) closed at $11.95, up 12.2%.
  • Kohl's (NYSE:KSS) closed at $22.90, up 8.8%.
  • L Brands (NYSE:LB) closed at $18.32, up 9.1%.
  • Macy's (NYSE:M) closed at $7.86, up 12.9%.

So what

All of these companies' stocks have had wild rides over the last couple of months. Nearly all of their stores were closed in March, amid social-distancing measures intended to slow the spread of the SARS-CoV-2 virus. 

A Macy's sign outside a store.

Image source: Macy's.

While most began reopening stores in May, their stocks have been volatile, trading up or down-- often dramatically -- as investors gauge the state of consumers' willingness to spend discretionary income and return to brick-and-mortar stores.

That gauge was looking relatively good on Wednesday, after payroll-processor ADP reported that the private sector shed 2.76 million jobs in May. That was a sobering number, but far better than the 9 million lost jobs that analysts had expected -- and a huge improvement over the record 19.56 million jobs lost in April. 

It was enough to add to a growing sense that the U.S. economy bottomed in April and is now recovering. If so, it's very good news for brick-and-mortar retailers. 

Now what

While the news is optimistic, and the consumer discretionary sector's move upward makes sense in context, investors should keep in mind that we're not out of the woods yet. We don't yet know whether the pandemic will have a second wave later this year, and -- even if it doesn't -- it's not yet clear how quickly consumer spending will recover, with so many jobs lost.

But that said, things are looking a lot better for all of these companies, and their investors, than they were six weeks ago. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.