Most American stocks dropped for a second day after Target Corp. and Lowe’s Cos. reduced forecasts, heightening concern that the housing slump has slowed consumer spending. Lennar Corp., the largest American homebuilder, sank to a four-year low on the worst quarterly loss in its history. Target, the second-largest American discount chain, retreated the most in six weeks after slashing its projection for September sales. Lowe’s, the second-biggest home-improvement retailer, posted its steepest decline since 2003 after saying earnings this year may miss its prior forecast.

The Standard & Poor’s 500 Index slipped 0.52 to 1,517.21. The Dow Jones Industrial Average increased19.59, or 0.1%, to13,778.65. The Nasdaq Composite Index added 15.5, or 0.6%, to 2,683.45, helped by a 1.7% rise in Microsoft Corp. About eight stocks dropped for every five that rose on the New York Stock Exchange.

Most stocks fell for three of the last four days, pushed down by concern the Federal Reserve’s interest rate cut may have come too late to keep the economy from stagnating. Reports today also showed consumer confidence and home sales slipped.

“The housing numbers and the retail communications from Target are weighing on the psychology of the market,” a manager of $21 billion at Fifth Third Asset Management in Cleveland, Scott Richter, said. “The consumer is getting pressured right now and that works right down the line to retail sales.”

The market’s decline was limited after investors increased bets that the Fed will continue reducing interest rates this year to revive economic growth.

Target dropped $2.95, or 4.6%, to $61.35. Comparable-store sales will increase between 1.5% and 2.5% for the five weeks through October 6, the company said. Target previously forecast a September gain of between 4% and 6%. Lowe’s lost $2.04, or 6.7%, to $28.51. Profit this year may be at the low end or slightly below an August 20 forecast of $1.97 to $2.01 a share, the company said. Eighteen analysts surveyed by Bloomberg estimated an average profit of $2.01.

Retailers accounted for seven of the top 10 percentage declines in the S&P 500 after the Conference Board said its gauge of consumer confidence fell to the lowest level in almost two years and the International Council of Shopping Centers Inc. reduced its forecast for September retail sales growth.

Lennar lost 96 cents, or 4%, to $23.22. The largest American homebuilder reported a fiscal third-quarter loss of $513.9 million as reduced demand for housing forced the company to write down the value of some real estate. Revenue slid 44% to $2.34 billion.

Home prices in 20 American metropolitan areas fell 3.9% in the 12 months through July, the most on record. The S&P/Case-Shiller home-price index declined in January for the first time since the group started the measure in 2001 and has receded every month since then.

Sales of previously owned American homes slipped 4.3% in August to an annual rate of 5.5 million, a five-year low, the National Association of Realtors said.

Builders also fell after UBS AG analysts wrote in a note dated September 24 that the housing market probably won’t “trough” until 2009. The brokerage started coverage of the American homebuilding sector with a “pessimistic” outlook.

“The numbers here are just not getting better anytime soon,” a manager of about $1 billion at Knott Capital Management in Exton, Pa., Peter Schofield, said. “There’s too much supply right now relative to demand. We think bad news is still in the offing.”