Luxury department store retailer Saks was on the rise after reporting a surprise profit in the third quarter.

Saks earned $1.9 million, or 1 cent a share, topping expectations for a loss of 11 cents a share. Revenue fell 8.5% to $631.4 million, but that was better than the $625.6 million that analysts expected.

Scaling back on promotions and clearance merchandise helped on the revenue end. At the same time, expenses declined more than expected, helping to bolster the bottom line.

On Monday, Goldman Sachs made a sector upgrade to luxury retailers, sending shares of Saks and peers Nordstrom, Coach, and Tiffany higher. That improved view, plus better than expected retail data on Monday, helped to quell some investor fears about holiday spending.

The bottom line: We believe there is more stability and predictability in our business compared to twelve or even six months ago; however, the overall environment remains challenging, said Saks CEO Stephen Sadove.

He added that, even though we remain cautious in our near-term outlook, we are positive about the future of our business and luxury retailing. We believe the actions we have taken and our current merchandising, service, marketing, and cost containment initiatives will position us to significantly improve our performance in the long term.

Caterpillar Down

Caterpillar found itself in the crosswinds of disappointing news and commentary Tuesday, putting a bit of pressure on the stock.

Industrial production increased by just 0.1% in October, vs. 0.6% the month prior and expectations for an 0.4% uptick. That data weighed heavily on industrial stocks with Caterpillar, and fellow Dow components Alcoa (AA) and Boeing tracking down more than 1% each.

Strength in the dollar, which has had a strong inverse relationship with commodities, industrials and equities broadly, didn t do the stock any favors.

Nor did comments on CNBC by analyst Meredith Whitney. In an interview late Monday, Whitney said that she hasn t been this bearish in a year, mentioning Caterpillar as an example of an overvalued stock. "I look at the board and every single stock from Tiffany to Bank of America to Caterpillar is up. But there is no fundamental rooting as to why these names are up particularly in the consumer space."

The bottom line: Shares are up an impressive 23% since October 1. A one day breather seems like a small thing. Or maybe Whitney, known for being right in predicting the fallout of financials at the start of the crisis, is right.