Retail shares on Wednesday rose after the Federal Reserve revealed new plans to inject cash into money markets as a way to reduce stress in financial markets.

The Fed on Tuesday said it will inject cash to the money markets through term-auction facilities, shortly after reducing the interest rates by a quarter-point.

S&P Retail Index rose by 2.7% to 437.26 as Dow Jones Industrial Average increased 2%.

Circuit City Stores Inc., Macy's Inc. and Family Dollar Stores Inc., were the major gainers as their shares rose 3.5%, 2.6% and 3.1% respectively.

However, Office Depot Inc. had a major decline in its shares as it fell 2.4%.

Office Depot's sales and profit declined in the fourth quarter after third-quarter results were affected by declining housing markets in markets such as Florida and California.

This weakness appears to be spreading to other U.S. retail markets, creating additional pressure on sales and margins, said Office Depot.

S&P California Florida Retail