Standard & Poor's Equity Research lowered its rating on Jones Apparel to "strong sell" from hold, and cut rival Liz Claiborne Inc to "sell" from "hold."

S&P cited a "deteriorating retail environment" and expectations that consumer spending will continue to come under pressure as U.S. employment and disposable income levels further weaken.

Many consumer stocks were lower on Wednesday as the U.S. government reported that retail sales last month dropped the most in more than three years. The Standard & Poor's Retail Index <.RLX> fell 3.7 percent, along with declines in the wider market as the retail data stoked recession fears.

On Tuesday, Jones Apparel slashed its earnings forecast for the full year, saying consumers were spending less and it expected to have to mark down prices.

The company, whose brands include Jones New York and Nine West, said it now expects full-year adjusted profit from continuing operations of 93 cents to 98 cents a share, down from a prior range of $1.20 to $1.35 a share.

Lazard Capital Markets analyst Todd Slater said in a research note on Wednesday that Jones Apparel currently had a "strong" $200 million cash position at the end of the third quarter. He said the company's cash would more than cover a $250 million debt maturity coming due next year.

However, Slater added that "the turnaround story will have to be put on hold" as Jones Apparel sales slow.

Jones Apparel shares were down $3.37, or 24.9 percent, at $10.15 on the New York Stock Exchange after touching a low of $9.26 earlier in the session. Liz Claiborne was off $1.05, or 8.9 percent, at $10.71 after it hit a year low of $9.99.

(Reporting by Karen Jacobs, editing by Maureen Bavdek)