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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.

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.

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.

People need to eat, and Wal-Mart (NYSE: WMT) sells food. People need to cover themselves, and Wal-Mart sells apparel. You get the idea – the biggest needs may be thin-margin, and their all sure things. Wal-Mart plays in the inevitable, which makes its latest market entry a little less surprising than you might think. Wal-Mart is pushing caskets and urns – depending on how you want your remains preserved. What is a bit shocking, however, is that the brick-and-mortar player is selling its death gear online.

Wal-Mart is using its low price strategy to beat funeral homes, which have seemingly forever been the biggest sales channel for caskets. Prices start at $999 for the low end models and go up to the Sienna Bronze Casket at $3,199. Except for this last one, all models sell for under $2,000 ... and all product ships within 48 hours. The funeral homes are over a barrel on this one, since federal law requires them to accept third-party caskets.

Wal-Mart is supplied by Star Legacy Funeral Network, and both are apparently happy with the first week's sales.

The Bentonville-based retail giant is not the first to get into the gloomy business of bodies. Discount retailer Costco (NASDAQ: COST) is already in the online casket business.

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.

Amazon (NASDAQ: AMZN), simply put, had a quarter to die for, the kind that all shareholders have on their wish lists. The Q3 numbers, which were released on Thursday after the bell, speak for themselves. Net sales: up 28%. Operating income: up 62%. Per-share profit: up 67% to 45 cents. Free cash flow for the trailing twelve months: up 98%. Yep, Amazon's fundamentals seem to be heading in the right direction.

According to our earnings preview, Wall Street was on record as wanting to see 33 cents per share on the bottom line. Amazon's management did a fine job of supplying further evidence to the market that the company's online business model is not only here to stay, but that it should provide shareholders with a significant amount of value over time.

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 international division of Wal-Mart Stores (NYSE: WMT) would rank as the fifth-largest global retailer if it were a standalone company. With sales of $100 billion, it certainly looks impressive from a sales perspective. But, Wal-Mart international has failed in quite a few markets in recent years under the then-leadership of current company CEO Mike Duke.

Recent partnerships in India and China have repaired Wal-Mart's somewhat disjointed international picture, and international operations are now given autonomy and freedom to operate as needed inside the culture of each region and country where they are located. Long gone are the days of the "big box" retailing format being simply exported to other countries. That strategy obviously does not work.

The wireless mobile phone service is a highly lucrative business. Now the competition is heating up with the expansion of service from Wal-Mart Stores Inc. (NYSE: WMT) service.

Walmart will offer prepaid mobile phone service for $30 for 1,000 minutes and $45 for unlimited calling. Walmart will expand service to 3,200 stores from 234. Response to the initial launch was "overwhelming," said Walmart.

Nutrisystem Inc. (NASDAQ: NTRI) will soon be coming to your local Wal-Mart Stores Inc. (NYSE: WMT) location in the first partnership between the two companies -- and the first retail exposure for the venerable infomercial nutrition company.

Nutrisystem's 14-day "Starter Program" will start hitting Wal-Mart shelves in over 3,200 locations starting now -- and just in time for the holiday rush and also in time to become somewhat entrenched leading up to the 2010 New Year's holiday (and all those resolutions). Like many other brands, though, will this tarnish Nutrisystem's brand? Nah -- or Apple Inc. (NASDAQ: AAPL) would have never allowed its chic and still uber-popular iPhone for sale inside Wal-Mart either.

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.

Costco Wholesale Corp. (NASDAQ: COST), the popular warehouse store that competes with BJ's Wholesale Club (NYSE: BJ) and Wal-Mart (NYSE: WMT), will report Q4 earnings on Wednesday, October 7. How will the company do?

Don't look for growth, my friends. According to Earnings.com, estimates from Wall Street say that Costco will produce 77 cents per share in income. Unfortunately, that represents a 16% drop in the metric. Surprising? Maybe a little. After all, we're still suffering a bad economy, and you figure that people would want to cut costs by leveraging the bulk buying power of the Costco business model.

Wal-Mart Stores Inc. (NYSE: WMT) has been the leader in DVD sales in the U.S. for years now. It's estimated that 40% of all U.S. DVD sales originate within the doors of the world's largest retailer. But, could those days be coming to an end?

With Blu-ray DVD players coming with built-in internet video streaming, cable and satellite having video-on-demand choices of all recent movies, and more people buying content from Apple Inc.'s (NASDAQ: AAPL) iTunes every day, what is the future of the physical DVD?

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.