Retail stocks jumped on Friday, with Family Dollar Stores, and Big Lots posting gains.

The S&P Retail Index was up 5.42, or 1.2 percent to 461.92. The Dow Jones U.S. retail index rose 5.15, or 1.42 percent to 369.58.

Family Dollar Stores (NYSE: FDO) rose $0.73, or 2.97 percent to $25.34, despite a voluntary recall on Thursday of Halloween pails due to high lead content.

Big Lots rose (NYSE: BIG) $0.84, or 3.65 percent to $23.86 as the excess inventory retailer predicted that earnings for its third quarter ending on November 3 to be near the high end of its 9 cents to 13 cents per shares profit range.

Wal-Mart (NYSE:WMT), the world's biggest retailer, saw its shares rise $0.76, or 1.73 percent, to $44.64 after Merrill Lynch upgraded the stock to neutral from sell on expectations that sales can maintain sales growth of 4 to 5 percent for the next 12 to 18 months.

Meanwhile, footwear firm Deckers Outdoor (Nasdaq: DECK) saw its shares rocket $31.11, or 27.51 percent to $144.20 after it reported net income rose to $1.47 per share compared to $0.81 a year ago. Sales rose 57.2 percent to $129.4 million. The firms said the strong sales were due to the popularity of its UGG brand.

Macy's (NYSE:M)shares rose $0.54, or 1.66 percent to $33.00 after it said it had signed a deal with Tommy Hilfiger USA to become its exclusive U.S. department store retailer for sportswear beginning in fall 2008.

Among decliners was shoe retailer DSW (NYSE:DSW), which fell $2.31, or 9.23 percent to $22.71 as it cut it earnings guidance for 2007 by at least 10 percent from its $1.48 per share performance last year. DSW had previously forecast a profit rage between $1.63 and $1.68. Analysts polled by Thomson Financial had expected $1.54 per share.

S&P Walmart Retail Merrill Lynch