US market falls slightly

Stocks drifted lower in New York today, despite a better-than-expected Commerce Department report showing that the weak US economy has not kept consumers from spending.

Retail stocks recorded some gains, but the news failed to spark the level of investor interest needed for broader buying. The result: a market that meandered and then faded as the session advanced.

The Dow Jones industrial average closed down 3.74 at 10,412.17, its second straight session to finish nearly flat.

Broader stock indicators lagged. The Standard & Poor’s 500 index dropped 4.56 to 1,186.73, while the Nasdaq composite index lost 17.72 to 1,964.53. The technology-focused index has now closed down seven of the last eight sessions.

The Commerce Department report released today found that although retail sales were flat overall in July, consumers were still buying clothes, beauty products and eating out. Much of the month’s losses came from sluggish car sales and declining petrol prices.

‘‘This retail data was very important,’’ said James Meyer, director of research at Janney Montgomery Scott. ‘‘If you’re looking for this economy to turn around, it starts with consumer spending.’’

But the market’s reaction was guarded, in part because of indications by two bellwether retailers that tougher times ahead.

Home Depot advanced dlrs 1.20 to dlrs 49.30 after reporting better-than-expected results, but cautioned that the company remained wary about the rest of 2001. Wal-Mart rose 16 cents to dlrs 52.36 after meeting second-quarter expectations but cautioned second-half growth would be slower than it had previously forecast.

Technology stocks were mostly weaker. Microsoft slid dlrs 1.14 to dlrs 64.69 on speculation about whether its new Xbox video game system would be released as scheduled in November, while Ciena dropped dlrs 1.31 to dlrs 29.68.

Financial stocks lagged on news of more job cuts at Citigroup, which fell 38 cents to dlrs 48.75.

There were a few bright spots, including Johnson & Johnson, which rose dlrs 1.29 to dlrs 56.99 - a 52-week high.

An interest rate cut from the Federal Reserve next week - the seventh such move of 2001 if it occurs - could reassure Wall Street and perhaps inspire a short-term rally, but no longer-term momentum, analysts said. Tax rebate cheques spent this month should also provide some boost.

Advancing issues led decliners more than 3 to 2 on the New York Stock Exchange. Volume came to 952.07 million shares, ahead of the 839.84 million reported on Monday.

The Russell 2000 index gained 2.59 to 480.19.