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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.

Once upon a time, retailers measured success by the number of people walking by in the mall, how many entered the store, the percentage they spent, and basket size. Now, a world of zeroes and ones has changed their perspective entirely. Social media is expected to be the star during the coming holiday season, with retailers pushing Facebook, YouTube, and Twitter content to get in front of consumers and affect either online or in-store purchases. Smaller Christmas budgets are expected, so the fight is on to garner as large a share as possible of a shrinking pie.

Of course, nobody would come out and say, "Social media is nonsense, and I'm not getting anything for my investment." So, when the likes of Starbucks (NASDAQ: SBUX), JCPenney (NYSE: JCP), and Target (NYSE: TGT) say that social media is connecting them with their customers and leading to more effective campaigns and product launches, do take it with a grain of salt. What can't be ignored, however, is that they're committing more resources to social media marketing, even though it's still far too soon to tell if it will be effective.

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.

Halloween, though not the blockbuster holiday that Christmas is, still results in some additional spending on the part of consumers as they stock up on candy and costumes, and maybe take in a scary movie or two. With those treats in mind here are some stocks that may give investors sweet dreams -- and hopefully not nightmares.

As is well known, candy is all the rage at Halloween, and among the largest candy stocks are Hershey Co. (NYSE: HSY) and Cadbury PLC (NYSE: CBY). Last week, Hershey reported third-quarter earnings rose 30% despite weaker volumes affected by higher prices for its sweets. Last year's numbers also included special charges. Still the company said it expects full-year earnings to be ahead of Wall Street forecasts. In 2010, the Pennsylvania company said it expects earnings excluding items to rise 6% to 8%. The stock has a forward-looking price-to-earnings ratio of 16 and a current dividend yield of 3.1%.

Small book retailers were buying in bulk from major online booksellers because they could really save some money. One was buying up to 70 copies of a particular title -- it was $5 less a pop from the big guys than it would have been from the publisher. Finally, however, the big retailers have become wise to the trend and taken action, according to the Wall Street Journal (subscription required).

Wal-Mart (NYSE: WMT), Amazon (NASDAQ: AMZN), and Target (NYSE: TGT) have decided to cap the number of books customers can buy online, a measure intended to prevent smaller competitors from treating them as partners. Walmart is limiting customers to two copies of a particular book, with Amazon placing the border at three and Target at five.

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%.

On Tuesday, discount retailer Target (NYSE: TGT) announced that it is going to do its best to stimulate the job market. The company announced that it will open 26 new stores, which will lead to 5,000 new jobs. These stores are set to open on October 11, and a majority of the stores will be of the general merchandise variety, with five of them full-grocery SuperTarget stores.

Target is making this move as the company is facing a tough market. A week ago, UBS cut the stock from "neutral" to "buy," citing a "tarnished image" for the retailer. Target saw quarterly profit fall for an eighth straight quarter after reporting a second-quarter drop. In addition, Target saw same-store sales fall 6.2%.

Target Corporation (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT) will be mortal enemies this holiday season after both seeing consumers close their wallets and purses last season. Although September job losses were worse than expected, the U.S. economy continues to gain confidence, regardless of market losses this week.

What will be the weapons of choice in this season's holiday retail market? Wal-Mart will be pushing no less than 100 toys priced at $10 or below, with some hot names like "Transformers" in that mix. At the same time, Target announced the same items for $11.99. Not quite the same, is it? With Wal-Mart's research indicating that many of its shoppers start budgeting for Christmas purchases by August, that puny $2 difference does indeed make an impact on millions of consumers.

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.