NEW YORK, JULY 1 -- The stock market gave ground in quiet trading today, beginning the second half of 1987 on a hesitant note.

The Dow Jones average of 30 industrials, down 28.38 on Tuesday, dropped another 8.77 to 2409.76.

Volume on the New York Stock Exchange slowed to 157.04 million shares from 165.48 million in the previous session.

Analysts said a lull seemed to have settled in after investing institutions completed their last-minute maneuvers to ready their portfolios for midyear reports to their clients.

There was widespread talk on Wall Street that the market might be "overextended" after the Dow Jones industrial average's rise starting in late May that took it to record highs as recently as last Thursday.

The advance failed to impress many observers because it was concentrated in a relatively small number of stocks and came on light volume.

Nevertheless, some brokers remained hopeful that the market might perk up again after the long holiday weekend that begins at Thursday's close, especially when companies begin posting their earnings reports for the second quarter.

Santa Fe Southern Pacific rose 2 1/4 to 52 1/4 and led the active list on turnover of more than 3.4 million shares. As expected, the Interstate Commerce Commission on Tuesday voted for the second time to reject the proposed merger of the Southern Pacific and Atchison, Topeka & Santa Fe railroads.

Reichhold Chemicals climbed 2 3/8 to 63 1/8. The company rejected a previously announced $52.50-a-share takeover offer from Dainippon Ink & Chemicals of Japan, describing the bid as inadequate.

Among the blue-chip industrials, International Business Machines gained 1 1/2 to 164, and American Telephone & Telegraph added 3/4 to 28 3/8, while General Electric dropped 3/8 to 54.

Unitrode fell 1 1/8 to 12 3/4. The company said it would have a substantial operating loss for the quarter ended Aug. 1 because of a suspension of shipments of some products after an audit by a Defense Department agency.

Declining issues outnumbered advances by about 4 to 3 on the NYSE. The exchange's composite index of all its listed common stocks lost .55 to 170.52