By Jeanine Poggi, TheStreet

Retailers were rallying as the Senate made moves to extend unemployment benefits, which could provide a boost to dwindling consumer confidence.

The S&P Retail Index was rising 1.9% to 399.46, led up by safety stock Wal-Mart (WMT).

Elsewhere in the discount sector, BJ's Wholesale (BJ) climbed on renewed takeover chatter. Shares of the company closed 2.5% higher to $44.91.

J.Crew (JCG) was one of the day's biggest gainers, advancing 9.4% to close at $35.50, after being upgraded to outperform by an analyst.

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Cowen & Co. said shares of the company are attractively priced, falling 26% since its first-quarter earnings report. And with just over 300 full-line stores and factory outlets, its small brick-and-mortar base also means J.Crew has plenty of growth opportunities.

Other notable gainers included J.C. Penney (JCP), which soared 9.1% to $23.96, New York & Company (NWY), which spiked 10% to $2.30 and Crocs (CROX), which gained 7.5% to finish the day at $11.24.

RadioShack (RSH) was one of the few retailers in the red, as the potential for a buyout waned. Reuters reported that two private-equity groups, Blackstone Group (BX) and TPG Capital, are unlikely to unlikely to pursue a potential bid for the retailer, citing sources familiar with the matter.

Shares of RadioShack tumbled 6.6% to close at $20.05.

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