NEW YORK (

TheStreet

) -- Improving retail sales and a more upbeat holiday outlook could not calm investors fears after disappointing housing and wholesale price data.

Retail sales for the week ended Oct. 17 inched up 0.2%, according to the International Council of Shopping Centers and Goldman Sachs. And on a year-over-year basis retail sales jumped 2.8%, its biggest gain since August 2008.

The ICSC expects October same-store sales to be flat, with upside potential.

This bodes well for the upcoming holiday shopping season and this merriment continued with new holiday forecast from ShopperTrak.

The retail research firm predicts holiday sales will rise 1.6% over last year and a 4.2% jump in foot traffic.

This is better than other

holiday outlooks

, most of which saw sales being either flat or up or down 1%.

But this good news was overshadowed by a

smaller-than-expected jump in housing starts

and a decline in permits, sending the S&P Retail Index down 1.8% to 390.47.

Shares of

GameStop

(GME) - Get Report

are plunging 7.6% to $26.03 after an analyst downgraded the video-game retailer to neutral from buy on disappointing September sales in the industry.

On Monday, NPD Group reported that

video game sales

inched up 1% to $1.27 billion, its first increase in six months, but still well below analysts' expectations.

Barnes & Noble

(BKS) - Get Report

, meanwhile, is tanking 5.8% to $18.91, despite the expected launch today of its highly anticipated e-reader, which could compete with

Amazon.com

(AMZN) - Get Report

's Kindle.

Best Buy

(BBY) - Get Report

is off 3.6% to $39.39, even after the electronic retailer said it is teaming with

Netflix

(NFLX) - Get Report

to stream movies and television episodes over the Internet that will be available for viewing through its Insignia Blu-ray Disc Players.

Rite Aid

(RAD) - Get Report

is also dropping, by 3.9% to $1.49, a day after the drugstore said it is nearing the completion of

refinancing its debt due in September 2010

.

The company announced on Monday that it plans to sell $250 million in senior notes due in 2019. The proceeds will be used to pay back and cancel accounts-receivable scrutinized facilities, and to fund related fees and costs.

Coach

(COH)

topped Wall Street' profit expectations and

saw a rise in sales in its first quarter

, yet share of the company are sinking 3.3% to $33.36 in afternoon trading.

There were a few greens mixing in with the red, however.

Steven Madden

(SHOO) - Get Report

is up 1.2% to $40.50 after it raised its full-year outlook. The shoe retailer now expects to earn between $2.55 and $2.65 a share, up from prior guidance between $2.05 and $2.15.

Family Dollar Stores

(FDO)

is also advancing, by 2.3% to $29.26, after an analyst upgraded the discounter to outperform from neutral. Credit Suisse analyst Michael Exstein said Family Dollar will most likely increase its square footage over the next five years and grow its profit margin, neither of which are reflected in the stock price.

-- Reported by Jeanine Poggi in New York

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