Tuesday morning brought a big move up for the stock market, adding onto Monday's modest gains. Some strong economic data created a more positive mood on Wall Street, with evidence supporting the idea that American consumers are trying to get back to normal. As of just after 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 316 points to 26,080. The S&P 500 (SNPINDEX:^GSPC) had gained 42 points to 3,109, and the Nasdaq Composite (NASDAQINDEX:^IXIC) had picked up 104 points to 9,830.

The biggest news for today came from the retail sector, where there's new data showing that people haven't stopped shopping yet. That's pushing shares of Nordstrom (NYSE:JWN) and Kohl's (NYSE:KSS) sharply higher and could point to more favorable conditions for the industry as a whole.

Nordstrom store front with a couple dozen people outside and several tables in a balcony cafe.

Image source: Nordstrom.

Retail sales rise but still have some catching up to do

The U.S. Census Bureau released its latest data on the retail front on Tuesday morning, and investors liked what they saw. Monthly sales for the retail and food services industries for the month of May came in at $485.5 billion. That was up almost 18% from April's reading. Retail sales excluding food services climbed 17% in May compared to April's figures.

The numbers were less comforting in comparison to last year's coronavirus-free results. Total retail and food services sales were down 6% year over year, with retail sales falling 1.4%. Yet even there, some categories saw solid gains. E-commerce-driven "nonstore retailers" saw sales rise 31% compared to May 2019, and building materials and garden supplies dealers had sales climb 16% year over year. Grocery stores also performed well.

However, some categories got hit hard. Clothing and accessories stores saw sales slump 63% from year-ago levels, while department stores took a 26% hit. Electronics and appliances stores suffered a 30% sales decline compared to May 2019, and furniture stores were down more than 20% as well.

Why did Nordstrom and Kohl's rise then?

With that as background, it's surprising to see department store stocks among the winners on the day. Nordstrom shares picked up more than 12%, while Kohl's advanced nearly 10%.

Investors seem to believe that the May sales figures are only the beginning of a sustained period of recovery for the consumer sector more broadly. Few investors have been surprised with how bad the numbers at Kohl's and Nordstrom have been, and they've largely been in line with their peers in the industry. In some locations, stores were closed into the month of May, so June might well be the first time that those stores will enjoy a full month's worth of selling activity.

Investors are hopeful that old themes like back-to-school will work this year. Kohl's has already accelerated its return to more normal inventory levels after having scaled back substantially during the spring. Nordstrom has also succeeded in handling its inventory effectively during the pandemic, limiting the amount of damage done to its financials.

To be sure, both retail stocks still have a lot of ground left to make up. Nordstrom and Kohl's are trading at less than half their share price at the beginning of the year. At this point, all it would really take to justify current stock prices is for the department stores to avoid bankruptcy or more dire needs for additional capital. It could take a while for consumers to bounce back, but it looks like Kohl's and Nordstrom are on the right track to make it through tough times.

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.