(Update adds stock prices.)

There were no fireworks when it came to retail sales in the run-up to the Fourth of July weekend.

Sales for the week ended that July 4 grew by a measly .1%, according to the International Council of Shopping Centers and Goldman Sachs.

While this was still better that the soft sales posted in the first half of the month, retailers are calling June a wash heading into Thursday's same-store sales reports.

ICSC predicts June sales, minus Wal-Mart Stores ( WMT), will fall 4.5%. This would be the 22nd consecutive month of same-store sales contraction.

Unfortunately for the sector, it's Wal-Mart and the discounters that are seeing the strongest sales and lifting the sector. The big-box retailer, which will no longer report same-store sales, held about 50% of the weighting in the monthly average

Now the sector must rely on some of the little guys, like Aeropostale ( ARO) and Buckle ( BKE), which have both actually managed to post double-digit comparable sales amid the recession.

Department stores are expected to perform the worst with a 9.4% decline, as shoppers search for discounts on essentials, which is the forte of neither Macy's ( M) and J.C. Penney's ( JCP).

Abercrombie & Fitch ( ANF) is also expected to be one of the month's biggest losers. J.P. Morgan analyst Brian Tunick predicts the teen retailer will be down between 30% and 32%.

Exceptionally wet weather across the country during the month is also expected to drown results. Last week, Walgreen ( WAG) and Rite Aid ( RAD) said dreary weather hurt sales of season items. The drugstores posted a 3.4% increase and .6% loss, respectively.

Shares of retail companies were weighed down on anticipation of these soggy results. The S&P Retail Index fell 2% to 305.58 in afternoon trading. Some of the biggest decliners included Target ( TGT), dropping 2% to $44.72, Nordstrom ( JWN), slipping 3% to $18.67, American Eagle Outfitters ( AEO), sinking 3% to $12.96 and Talbots, ( TLB), shedding 4% to $4.45.

But investors shouldn't panic just yet. The true measure of retail spending will arrive with the back-to-school season. If, at that time, parents are not willing to buy clothes for their children, it's unlikely they will be eager to spend come the all-important holiday season. Then you can go ahead and panic.
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