US STOCKS-Wall Street rises, biotech shares lead rally

* Retail stocks slip after soft economic data, Macy's outlook

* Nasdaq biotech index up 2.1 pct

* King, SeaWorld plunge on weaker-than-expected revenue

* Dow up 0.5 pct; S&P 500 up 0.6 pct; Nasdaq up 1 pct (Updates to afternoon trading, changes comment, byline)

By Akane Otani

NEW YORK, Aug 13 (Reuters) - U.S. stocks rose on Wednesday, with the Dow returning to positive territory for the year as the market shrugged off weak earnings reports and a slump in retail shares.

Retail stocks capped the market's gains as retail sales unexpectedly stalled in July, marking the weakest report since January. Macy's quarterly earnings missed analysts' estimates and the stock fell 6.4 percent to $55.96.

Despite data painting a weak consumer picture, all 10 S&P primary sectors gained. Biotech shares surged, with the Nasdaq biotech index climbing 2.1 percent on the back of stocks including InterMune Inc (NasdaqGS: ITMN - news) and Jazz Pharmaceuticals PLC .

"All the indicators that we got today - the earnings from Macy's, Deere & Co and the economic data - looked a bit weaker than we anticipated, but I think it's pretty safe to say that the market isn't reacting to those numbers as we would have expected," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

Any actual or potential de-escalation in Russia and Ukraine "would bring a brief rally to the market," she said, adding that signs from President Barack Obama that the United States will not send combat ground troops to Iraq "has given the market some upward momentum."

The Dow Jones industrial average rose 88.21 points or 0.53 percent, to 16,648.75, the S&P 500 gained 12.17 points or 0.63 percent, to 1,945.92 and the Nasdaq Composite added 43.00 points or 0.98 percent, to 4,432.25.

Poland's foreign minister said the threat of Russia invading Ukraine had receded amid reports that a Russian aid convoy would cross the Ukraine border under the aegis of the Red Cross. Still, Ukraine said the convoy would not be allowed to pass.

Health care stocks led gains in the S&P 500, rising 1.2 percent. Vertex Pharmaceuticals shares rose 4 percent to $88.81 after the company received approval in Europe to use its treatment Kayldeco on patients with cystic fibrosis.

Shares (Frankfurt: DI6.F - news) of biotech Biogen Idec (NasdaqGS: BIIB - news) gained 3.0 percent to $334.58, and shares of Actavis (NYSE: ACT - news) climbed 1.9 percent to $207.11.

The stocks of both King Digital Entertainment (NYSE: KING - news) and SeaWorld Entertainment (NYSE: SEAS - news) suffered their biggest one-day decline ever after weaker-than-expected revenue.

King, maker of the video game "Candy Crush Saga," plummeted 23 percent to $14.02. SeaWorld sank 34.1 percent to $18.55 after the company slashed its full-year revenue forecast.

The losses in Macy's shares, a bellwether for the retail industry, sent shares of Kohl's Corp down 2.3 percent to $54.65 and Nordstrom Inc (NYSE: JWN - news) down 1.2 percent to $67.87.

Both names are slated to report results on Thursday. (Editing by Jan Paschal and Nick Zieminski)