The weak reports on Wednesday _ an alarming gauge of consumer behavior since the meltdown began midway through last month _ are fueling more worries about the holiday season and the overall economy, since consumer spending accounts for two-thirds of all economic activity.

Given the sharp falloff in sales and customer traffic, many retailers, including J.C. Penney Co., Kohl's Corp., Saks Inc. and Nordstrom Inc. cut their outlooks as they use aggressive discounts to pull in shell-shocked shoppers.

"This is not a significant comfort going into the holiday season," said Ken Perkins, president of research company RetailMetrics LLC. "Everybody across the board is feeling it. Even discounters are going to have a tough go. Consumers are going to tighten their purse strings even more."

As retailers reported their sales figures Wednesday, even discounters weren't immune to shoppers' mounting worries about their financial security.

Wal-Mart Stores Inc., the world's largest retailer, and wholesale club operator Costco Wholesale Corp. both reported solid sales but results were a bit shy of Wall Street estimates. Target Corp. reported a bigger-than-expected drop and said it expects problems with its credit card business to last through the rest of the year as customers have trouble making payments.

Luxury stores such as Neiman Marcus Group Inc. and Saks Inc., which had seen a sales slowdown, suffered sharp drops as well-heeled shoppers cut back on $600 stilettos and other luxuries. Many mall-based apparel stores and department stores including J.C. Penney Co. and American Eagle Outfitters Inc. found themselves mired in a deep sales slump.

Analysts are worried that spending could deteriorate even more as the problems on Wall Street further filter through the economy, with layoffs expected to rise in the coming months and the credit markets remaining frozen. That means that consumers are having a hard time getting loans and credit lines. That's adding to more stress for shoppers, who were already contending with high gas and food prices and a slumping home market.

And even with a massive government bailout package, the stock market has kept dropping _ signaling fears among investors that the rescue plan will not prove to be a panacea. In the last five trading days, the Dow Jones Industrials lost 1,400 points, wreaking havoc on Americans' retirement funds.

On Thursday, The Federal Reserve ordered an emergency interest rate cut of a half percentage point to cope with the worst financial crisis since the 1929 stock market crash. The Dow fell a bit in early trading Wednesday.

Wal-Mart offered a tepid sales outlook as it reported a 2.4 percent gain in same-store sales, or sales at stores open at least a year. Analysts had expected a 2.5 percent gain. The company said the impact from hurricanes Ike, Gustav and Hanna, which forced the company to temporarily close 341 stores, depressed same-store sales by 0.4 percentage point.

Wal-Mart said it expects same-store sales at its U.S. stores to be up from 1 to 2 percent for October.

The company said September same-store sales were strong in both grocery and health and wellness and that customers continue to look for basics. It added that children's clothing sales were positive but sales of discretionary items were soft.

Wal-Mart, like many U.S. retailers that operate overseas, is now also contending with an international economic slowdown. The retailer said it had solid sales figures in many of its international markets, despite tough economic conditions. But it did cite a 3.8 percent dip in same-store sales at Wal-Mart Mexico amid a slowdown in the Mexican economy.

Still, Wal-Mart said it's sticking with its current earnings estimate for the quarter ending Oct. 31.

Rival Target Corp., which has struggled because of its heavy emphasis on nonessentials like fashions and home furnishings, reported a 3 percent drop in same-store sales. That's worse than the 1.3 percent decline that Wall Street analysts had expected. It also reduced its third-quarter estimates as mounting defaults on payments for its store credit card has led to higher write-offs.

Costco announced a 7 percent gain in same-store sales, just below the 7.5 percent estimate. Excluding gasoline price inflation, same-store sales would have been up 6 percent.

But mall-based apparel and department stores continued to see their fortunes unravel.

Luxury stores were hit hard by the financial meltdown, which is expected to result in mounting layoffs in financial jobs. Saks reported a 10.9 percent drop in same-store sales, worse than the 6.8 percent decline expected. Nordstrom cut its third-quarter earnings and sales outlook as it reported a 9.6 percent decline in same-store sales, worse than the 7.1 percent decrease expected. Neiman Marcus suffered a 12.9 percent same-store sales drop.

Mid-brow Penney reported a 12.4 percent drop in same-store sales, worse than the 9.9 percent decline analysts had expected. The company cut its earnings and sales outlook for the third quarter. Kohl's cut its profit outlook as it reported a 5.5 percent dip in same-store sales, though results were not as bad as the 6.1 percent decline expected.

Among teen retailers, Pacific Sunwear of California Inc. had a 5 percent decline in same-store sales, worse than the 7.3 percent expected. American Eagle Outfitters Inc. had a 6 percent drop, worse than the 5 percent decline projected.

____

AP Business Writer Mae Anderson contributed to this report.