The stock markets drooped yesterday as profit warnings tempered investor excitement from Thursday's broad rally.

Profit warnings from Home Depot Inc. sent the Dow Jones industrial average down 5.83 points, or 0.1 percent, to finish at 8601.69. The technology-heavy Nasdaq Composite inched up 2.23 points, or 0.2 percent, to 1387.08. The Standard & Poor's 500 index closed at 908.59, down 0.44 points, or 0.05 percent.

Home Depot cut its earnings expectations for the fiscal year ending in February. The home-improvement chain blamed slowing sales at stores open at least a year and said it expects them to decline 10 percent during the fourth quarter. The company earlier said sales would fall 3 percent to 5 percent. The stock fell 14 percent to close at $21.38 and was the most heavily traded on the New York Stock Exchange.

Home Depot is the nation's second-largest retailer behind Wal-Mart, the biggest home-improvement chain and a widely held stock.

The company's revised outlook affected other retailers and companies. Wal-Mart dropped 3.10 percent to $50. Home Depot's announcement that power tools and hardware proved to be less popular gifts this Christmas also depressed makers of household appliances.

Appliance maker Black & Decker fell 9.50 percent to $40.01 and toolmaker Stanley Works lost 6.38 percent to close at 33.76. Lowe's, the No. 2 home-improvement retailer, fell 6.18 percent to $36.92.

The Home Depot outlook overshadowed a promising construction report from the Commerce Department and improved car sales, said Bob Basil, chief equity trader at Salomon Smith Barney.

Construction spending rose 0.3 percent in November from the previous month. That figure was boosted by a 1.5 percent increase, to $303.4 billion, in spending on new-home construction in November, the Commerce Department said.

Automakers released strong December sales figures, but investors and analysts weren't impressed, because the gains were achieved through profit-sucking no-interest-financing. Shares of Ford dropped 26 cents to $9.68. General Motors shares lost 41 cents to close at $38.54.

"The construction spending was only marginally better than expected, and the car companies are discounting these cars so heavily they're not necessarily making any profits," said Stephen Stanley, senior market economist at RBS Greenwich Capital Markets.

Analysts say more positive economic signals will be needed for the market to build on Thursday's impressive gains. Especially important will be earnings reports released this month and the Labor Department's unemployment data for December, due out Friday.

Other Indicators

* The New York Stock Exchange composite index fell 0.57, to 486.16; the American Stock Exchange index rose 4.02, to 837.63; and the Russell 2000 index of smaller-company stocks fell 2.27, to 390.31.

* Advancing issues outnumbered declining ones by 6 to 5 on the NYSE, where trading volume fell to 1.14 billion shares, from 1.23 billion on Thursday. On the Nasdaq, decliners narrowly outnumbered advancers and volume totaled 1.12 billion, down from 1.25 billion.

* The price of the Treasury's 10-year note rose 31 cents per $1,000 invested, and its yield fell to 4.02 percent, from 4.05 percent on Thursday.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 119.78 yen, down from 119.94 late Thursday, and a euro bought $1.0416, up from $1.0360.

* Light, sweet crude oil for February delivery settled at $33.08 a barrel, up $1.23, on the New York Mercantile Exchange.

* Gold for current delivery rose to $351.20 a troy ounce, from $346.10 on Thursday, on the New York Mercantile Exchange's Commodity Exchange.