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Ace Hardware and Hearth in Glen Burnie was doing a brisk business in high-end barbecues and hot tubs in the midst of the real estate boom. Now Pete Peterson, an owner of the store, is having trouble selling luxury items for the home as consumer budgets are squeezed. "When the value of homes went up quickly, people were able to take the money they didn't work for and spend it on things they wanted," Peterson said, referring to soaring home prices that made people feel richer and allowed some to cash out equity.

Wal-Mart and Home Depot sneezed yesterday. Will the economy catch a cold? The two companies, the nation's largest retailers and bellwethers for consumer spending, reported earnings disappointments for their fiscal second quarters and predicted an even bumpier year ahead because of higher energy costs and a sagging housing market. The sober forecasts reverberated across Wall Street, sending the Dow Jones industrial average and the Standard & Poor's 500-stock index down by nearly 2 percent.

While Crofton residents expressed jubilation two months ago when Wal-Mart announced it would scrap its plan to build a store along the Route 3 corridor, the property owner and developer didn't necessarily scrap his plan to bring in a big-box retailer. William D. Berkshire has pressed ahead on seeking key state approvals to build on the forested 20-acre parcel within the 121,000-square-foot Wal-Mart footprint, all the while talking with several suitors on a variety of projects. County lawmakers and civic leaders say another big-box store could be in the offing.

Wal-Mart failed to get approval for a bank. But the giant discount chain is effectively building one anyway. Wal-Mart said yesterday that it would rapidly expand the financial services offered in its vast network of stores, extending the reach of its retailing empire into its shoppers' wallets and the traditional turf of the American banking industry. Over the next year, the company plans to introduce a prepaid debit card, intended for low-income consumers, and install money centers - which currently offer check cashing, bill paying and money order services - into at least 1,000 stores, up from 225 now. The moves are seen as a precursor to even wider offerings, like mortgages and home equity loans, which could turn Wal-Mart into a significant force in the banking world.

Wal-Mart Stores Inc., the world's largest retailer, will buy back as much as $15 billion of shares and reduce the number of new stores as Chief Executive Officer H. Lee Scott responds to investor demands to boost returns. The plan to repurchase as much as 7.4 percent of its stock sent shares to their biggest gain in 19 months. Wal-Mart also said yesterday that it will open no more than 200 supercenters this year, a reduction from the 270 it previously planned to create. "Wal-Mart has taken a major step in attempting to improve returns on investment," Neil Currie, an analyst with UBS Securities LLC, wrote in a research note after the company's annual shareholders' meeting.

WASHINGTON -- The House easily passed legislation yesterday blocking retailers such as Wal-Mart Stores Inc. and Home Depot Inc. from establishing their own banks. Republican Rep. Paul E. Gillmor said he sponsored the bipartisan bill to close "the last loophole" allowing commercial companies to own a type of bank known as an industrial loan company, or ILC. Chartering such banks permits companies "to make an end-run around the bank laws" that otherwise would impose tight regulations, the Ohio congressman said on the House floor.

Amid a groundswell of community opposition, Wal-Mart announced yesterday that it has backed out of a plan to build a 121,000-square-foot Supercenter in Crofton. After meetings with County Executive John R. Leopold and property owner William Berkshire, a spokesman for the retail giant noted that despite making several concessions, "it has become clear to us that there are various views about a project of this size and scope at this specific site and its relationship to the County's long-term development profile."

WASHINGTON -- The nation's top banking regulators urged Congress yesterday to prevent companies such as the Home Depot Inc. and Wal-Mart Stores Inc. from branching into banking. Although Congress has kept commercial companies and banks separated for five decades, it has allowed an exception for limited-purpose banks known as industrial loan companies. Now, with a growing number of retailers opening ILCs, Congress must "close, and not just narrow, the loophole," said Donald L. Kohn, vice chairman of the Federal Reserve System.

Two years ago, Wal-Mart began a counterassault on its critics, launching a re-imaging campaign to thwart those who had successfully painted an unsavory picture of the company as an employer who didn't treat or pay its workers well, among other things. The world's largest retailer embarked on a public relations blitz, introducing initiatives to portray it as more environmentally friendly, more in tune with the communities where it was building and as a better employer to its workers. The strategy has succeeded in some areas, but the company remains a target of criticism on other fronts.

Maryland won't challenge a federal court decision striking down the state's "Fair Share" health care act, ending a two-year effort to force Wal-Mart Stores Inc. to pay more for employee health care, Attorney General Douglas F. Gansler said yesterday. Gansler - who made the announcement standing alongside representatives of the O'Malley administration, the comptroller's office and labor groups that pushed for the first-of-its-kind law - said he concluded that an appeal was likely to fail.