There's a chill in the air and a slight up-tick in confidence. Holiday discounts are coming a bit earlier, too. For retailers, this has been a great combination, leading to the second consecutive month in which retail sales increased.

This follows more than a year of drops. Consumers aren't going crazy, but they are loosening their wallets a little bit. Consumer spending accounts for 70% of the U.S. economy, and the coming holiday season is where the action is -- for the retail sector and, consequently, for everyone else.

Wal-Mart Stores Inc. (NYSE: WMT) wants to sell you everything it possibly can. Need funeral arrangements? The world's largest retailer wants to help. $4 prescription drugs? It has you covered. In fact, it's hard to think of any product category that Wal-Mart does not seem at least a little covered with. For good reason, too: Wal-Mart has tapped out much of the short-term growth by virtue of it being almost everywhere in the U.S. and selling everything you can possibly think of.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• AK Steel Holding Corp. (NYSE: AKS) reported better-than-expected Q3 results but shares fell anyway.
• Baidu Inc. (NASDAQ: BIDU) posted strong Q3 results but shares sold off on a disappointing guidance.
• Burger King Holdings Inc. (NYSE: BKC) said lower Q1 earnings fell short of analysts expectations.
• Dreamworks Animation SKG Inc. (NYSE: DWA) topped Q3 profit and revenue estimates, lifting shares.
• Geron Corp. (NASDAQ: GERN) posted a narrower-than-expected Q3 loss, sending shares sharply higher.
• Honda Motor Co. Ltd. (NYSE: HMC) reported lower Q2 earnings and sales on weak demand for cars.

Analyst upgrades:

• Target (NYSE: TGT) was upgraded two ratings to Buy from Sell at Citigroup, and it raised its price estimate on shares to $61 from $44. The firm sees significant earnings upside as the company's same-store sales improve and finds the valuation attractive at current levels.
• Motorola (NYSE: MOT) was upgraded to Outperform from Sector Perform at RBC Capital citing valuation, new product launches, and expectations that the Mobile Devices division will be profitable. The price target is $11.
• AK Steel (NYSE: AKS) was upgraded to Buy from Hold at Citigroup as it believes the company's Q3 results were solid and the China steel market is stabilizing. The firm raised its target to $21 from $17.
• Ceradyne (NASDAQ: CRDN) was upgraded at Wells Fargo to Market Perform from Underperform. The firm thinks that earnings expectations for the company have now reached more reasonable levels, limiting risk.
• FormFactor (NASDAQ: FORM) was upgraded to Outperform from Market Perform at FBR Capital ahead of the company's Q3 results due to valuation as it views the risk/reward on shares compelling. The firm raised its price target to $25 from $19.
• Texas Instruments (NYSE: TXN) was upgraded at Goldman to Buy from Neutral, citing 2H10 margin expansion and analog share gains. Target was raised to $29 from $27.
• Barrett Business Services (NASDAQ: BBSI) was upgraded to Buy from Hold at Roth Capital as the firm thinks the company will benefit from a labor market recovery next year. Roth notes that the stock's valuation has lagged behind most of its peers in recent months and it set an $18 target.

Toys R Us bought FAO Schwarz in May and is now ready to do something interesting with it.

It's a pretty bold move for a tough retail market. Toys R Us is opening FAO Schwarz boutiques in some of its stores. It's also relaunching the upscale toy seller's website, FAO.com. A year ago, this would have been suicide, but now, it might work out. With retailers in every sector fighting for an edge, this move may beef up the Toys R Us in-store experience, with the online play helping it reach higher-spending consumers that may not have access to an FAO brick-and-mortar spot.

Target Corp. (NYSE: TGT) was a crown jewel in the retail world in 2008. It was seen as a more upscale and clean alternative to Wal-Mart Stores Inc. (NYSE: WMT) but with the same discount strategy. It was winning customers for most of last year.

Then the economy went south (almost to the South Pole). Customers immediately flocked to save as much money as possible and obtain everyday staples as cheaply as they could. Target got whacked by reality. It's been playing catch-up to Wal-Mart ever since.

The markets had a relatively flat day to start the week, but there were some big name stocks that traded up to new 52 week highs in today's session. The DOW was up 0.2%, NASDAQ was down 0.01%, while the S&P saw the most change, closing up 0.4%.

Here are a couple of the bigger names that traded up to new 52 week highs in today's trading.

• Intel Corporation (NASDAQ: INTC): Chipmaker Intel Corp. traded up to a new 52 week high today of $20.65. It set its 52 week low of $12.05 back on 2/23/09. The stock is trading higher today ahead of the company's third quarter earnings numbers, which are due out tomorrow following the market close. Analysts are expecting the company to show earnings of 27 cents per share. The company reported a loss of 7 cents per share for its second quarter. The stock closed the day up 1.1% at $20.40, up $0.23 on the day.

Consumers are finally spending more, with September posting the first gain in more than a year. The International Council of Shopping Centers and Goldman Sachs (NYSE: GS) found that retail sales inched 0.1% higher last month. It doesn't seem like much, but a gain when you anticipate a fall is good news magnified. But, it came at the expense of great deals and other tools to entice somewhat hesitant customers into stores.

Kohl's (NYSE: KSS) and Limited Brands (NYSE: LTD) reported sales increases in September for stores open more than a year. J.C. Penney (NYSE: JCP), Macy's (NYSE: M) and Target (NYSE: TGT) posted declines, but they were better than expected. Delayed school openings thanks to a late Labor Day helped push to September sales that might have occurred in August otherwise.

Of course, all eyes are on the coming holiday season. The National Retail Federation forecasts U.S. consumer spending of $437.6 billion – up only slightly from $433.7 billion four years ago. So, we still have a lot of ground to make up before we can celebrate a recovery. As long as the situation is staying steady, though, we'll at least have a solid starting point.

Family Dollar Stores (NYSE: FDO), like Dollar Tree (NASDAQ: DLTR), is benefiting from the soft economy. Consumers love paying low prices, so they flock to these retail business models like moths to a flame. And judging by Family Dollar's Q4 report, people are still having a great time saving money.

Net income increased over 13% to 43 cents per share, which was two pennies higher than Wall Street's forecasts, according to our earnings preview. Unfortunately, sales weren't so great. Total sales went up 2.6%, and same-store sales saw a mere 1% gain. I would have expected higher growth in the comps metric.

MasterCard Advisors (NYSE: MA) service SpendingPulse says luxury and electronics sales headed upward last month, in a pleasant deviation from what became the norm all too long ago. A few other product categories posted gains as well – showing stability, if not a recovery. But, at this stage of the game, we'll take what we can get, right?

Luxury sales, not including jewelry, gained 3.4% year-over-year – that's an increase of $891 million. Last September, luxury goods suffered a 9.4% decline. Yet, this category is still below its September 2005 level of $94 million. Jewelry sales gained 1.2% relative to last year, compared to a year-over-year decline of 5.8% a year ago. Compared to apparel sales, this is a profound turn. In September 2008, the clothing category was off 5.7%, and this September, it was down only 2.9%.

Analyst upgrades:

• Kaufman Bros. upgraded American Superconductor (NASDAQ: AMSC) to Buy from Hold as it believes the follow-on contract from Sinovel has positive implications. The firm has a $36 price target on shares.
• Goldman upgraded Nike (NYSE: NKE) to Buy from Neutral citing valuation, visible long-term growth, and signs of sales stabilization. The firm has a $75 target on shares.
• Deutsche Bank upgraded Huntington Bancshares (NASDAQ: HBAN) to Buy from Hold on valuation following the recent underperformance. The firm raised its target on shares to $5.50 from $4.
• Novartis (NYSE: NVS) was upgraded to Buy from Hold at Citigroup.
• eHealth (NASDAQ: EHTH) was upgraded to Buy from Accumulate at ThinkEquity.
• China Precision Steel (NASDAQ: CPSL) was upgraded to Hold from Sell at Roth Capital.

Bright and early on Wednesday morning, UBS issued a downgrade on discount retailer Target (NYSE: TGT). The brokerage cut TGT to Neutral from Buy, but kept its price target of $52. UBS attributed the downgrade to valuation and concerns surrounding a change in consumer spending and the impact of said spending on the company's recovery. This downgrade comes after the retailer hired a research firm to look into its reputation -- I guess they should have checked on their reputation with brokerages.

Shares of the retailer are lower this morning thanks to the news, but there is reason to believe the retailer could enjoy a prosperous holiday shopping season. Hear me out, Target offers quality products at a reasonable price, making the retailer a good spot to find great deals. What's more, Target is constantly offering sales and coupons, making the deals even sweeter. These discounts are exactly what people will look for when trying to fill out Santa's list.

Bed Bath & Beyond (NASDAQ: BBBY), a chain that competes with Wal-Mart (NYSE: WMT) and Target (NYSE: TGT), issued Q2 numbers on Wednesday after the conclusion of the regular trading session. Net sales increased over 3%, and earnings per diluted share expanded by 13% to 52 cents. The retailer beat expectations by four pennies, according to the earnings preview.

This is a good showing for the retailer. As we all know, the economy continues to show signs of improvement. At least, that's what the pundits and the headlines have been telling us. An earnings report like this from a retailer does offer some evidence that the worst is behind us.

Bruce Watson over at sister site DailyFinance.com highlighted some news that is actually more important than many people might believe. At first glance, it's almost a trite little curiosity. Upon further inspection, its vital nature becomes compelling.

The article discussed the elimination of personal check-writing at retail points of sale. A few Whole Foods Market (NASDAQ: WFMI) locations, as well as 70 Fresh & Easy supermarkets in California, are no longer accepting checks as a viable form of payment. Whole Foods is apparently taking the idea out for a test run, but Fresh & Easy seems to be more serious about the idea.

Best Buy (NYSE: BBY) reported Q2 earnings on Tuesday. The retailer didn't do too badly on the top line, but the bottom line could have been better. Revenues were higher by 12%, and net income decreased 23% to 37 cents per share.

There are a couple things to consider here in terms of context. Best Buy's Europe locations helped to drive the revenue performance. Best Buy Europe also was partially responsible for the expansion seen in selling, general and administrative costs (without that segment and other acquisitions, SG&A would have been down).