Earlier today, Wal-Mart and Home Depot — the world's largest retailer and the world's largest home-improvement store, respectively — reported their second quarter operating results, and both companies' sales and earnings were very disappointing.

Wal-Mart reported a second-quarter profit, excluding certain non-recurring items, of $0.72 per share versus analyst estimates of $0.76 as "many customers around the world continue to be under economic pressure …," said the company's CEO H. Lee Scott.

During the quarter, Wal-Mart's same-store sales rose only 1.9 percent — the smallest increase since the company began tracking same-store sales in 1980. For the six-months that ended July 31, the company's same-store sales (excluding fuel sales) rose a mere 1.3 percent, versus 2.7 percent during the same period a year ago.

Wal-Mart lowered its full-year earnings guidance after the company cut prices on 16,000 back-to-school items.

Meanwhile, Home Depot reported a second-quarter profit from continuing operations of $0.77 per share versus $0.82 during the same quarter a year ago. The company's revenue fell for the first time in four years while same-store sales fell 5.2 percent as the U.S. housing slump reduced demand for appliances and remodeling.

Home Depot reiterated its forecast that full-year profit will fall as much as 15 percent this year.

I first commented on dismal same-store sales for the nation's leading retail chain stores last Thursday and warned our readers that many investors appear to be overlooking some important underlying economic developments, including a significant slowdown in consumer spending.

Last Friday, in my commentary, Markets on the Verge of a Plunge, I commented that the subprime debacle may not be limited to the housing market. I also informed our readers that stock prices have broken through major price-support levels and appear to be headed lower.

Well, nothing has changed over the past two days, as the S&P 500 Index has fallen back below a price-support level at around 1,454 and beneath both its short-term and long-term moving averages. Meanwhile, significantly more stocks have continued to decline in price as those that have advanced in price over the past two weeks.

And by the way, a question you might want to ponder is, Why has the consumer staples sector, which includes companies such as Procter & Gamble, Coca Cola, and Kraft Foods, been among the top-performing market sectors over the past two weeks?"

Well, the answer is quite simple — because the same Wall Street "experts," who are trying to convince you that the economy is on sound footing and that you should continue to add to your stock portfolio, have begun to invest in defensive stocks that tend to hold up fairly well when virtually every other sector of the market is due for big price declines.

So, as I mentioned last week, you may want to stop listening to the Wall Street "experts" and instead try our Financial Intelligence Report, which has been warning its subscribers about some important undercurrents in the financial markets for several months now.