Strong retail sales on Thanksgiving have given investors a reason to cheer today, and the Dow Jones Industrial Average (DJINDICES:^DJI) is up 0.33% in a short trading day.

Reports of strong sales at Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) have helped push most of the index's 30 components higher after hinting at strong Thanksgiving Day sales. Wal-Mart opened stores at 6:00 p.m. last night, and Target opened at 8:00 p.m., a strategy shoppers appear to be responding to. 

Wal-Mart said it posted 10 million transactions in the first four hours it was open, and had nearly 400 million page views on its website. It also said that 2.8 million towels, 2 million TVs, and 1.4 million tablets flew off store shelves.

Target had big-time deals on iPads, TVs, and digital cameras to draw in customers. The company hasn't released any data from its store sales, but did say that online sales and traffic was among the highest it's ever seen.

Overall, online sales also appear to be strong this holiday season. IBM Digital Analytics Benchmark reports that online sales are up 10% from a year ago, which should help Wal-Mart and Target nemesis Amazon (NASDAQ:AMZN). The online retailer is putting a new deal up as often as every 10 minutes today, and also expects a big Cyber Monday in a few days.

Can retailers profit in this environment?
Consumers appear to be spending this holiday season... but will retailers profit? That's the big question, with steep discounts dominating a lot of consumer spending this year. Target lowered its profit expectation earlier this month, and Wal-Mart's same-store sales have declined for three straight quarters. They may pick up some sales with deals this year, but they may not be profitable deals.

Keep an eye on sales volumes as they're released over the next few days, but also on what retailers say about their margins. If holiday sales are primarily from highly discounted items, there won't be much profit left for investors. That's the downside of the deals that have brought consumers out this season.