(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.) * Home Depot falls as U.S. same-store sales miss estimates * Auto shortages, spend shift to services tank US retail sales * Walmart flat after it raises sales forecast * Indexes down: Dow 1.07%, S&P 0.99%, Nasdaq 1.18% (Updates with afternoon trading) By Lewis Krauskopf, Devik Jain and Ambar Warrick Aug 17 (Reuters) - Wall Street’s main indexes dropped about 1% on Tuesday, weighed down by a drop in U.S. retail sales that raised concerns about the economic recovery, as well as by disappointing results from Home Depot. Almost all of the S&P 500’s sectors were lower, with consumer discretionary the weakest performer. Home Depot shares slid 4.5% after the company’s U.S. same-store sales fell short of estimates for the first time in nearly two years as pandemic-fueled do-it-yourself projects tapered off. Shares of rival Lowe’s Companies dropped over 5%. A report showed that U.S. retail sales fell more than expected in July, as supply shortages depressed motor vehicle purchases and the boost to spending from the economy’s reopening and stimulus checks faded, suggesting a slowdown in growth early in the third quarter. All three major U.S. indexes were down about 1%, after the S&P 500 and the Dow Industrial had previously closed at record highs for five straight sessions. On the heels of a survey on Friday showing a sharp drop in consumer sentiment, the retail sales report was “feeding into concerns that we might just see demand softening,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “The (market) backdrop remains really solid,” Nixon said. “At this point, when you have some of these negative macro indicators coming in and you have markets that are selling at all-time highs with pretty expensive valuations by any measure, there is just going to be more vulnerability to that kind of bad news.” The Dow Jones Industrial Average fell 382.59 points, or 1.07%, to 35,242.81, the S&P 500 lost 44.38 points, or 0.99%, to 4,435.33 and the Nasdaq Composite dropped 175.12 points, or 1.18%, to 14,618.65. Ten of 11 major S&P 500 sectors were lower, with healthcare the lone group in positive territory. With the market in a period that has seasonally been weak historically, investors have said stocks may be due for a significant drop, with the S&P 500 yet to experience a 5% pullback this year. On Monday, the S&P 500 closed 100% above its March 2020 low. Still, market watchers have said that huge amounts of cash held by investors and companies could protect stocks from severe declines, as buyers are quick to look for opportunities to scoop up cheaper shares. In an encouraging sign about the economic rebound, a Federal Reserve report on Tuesday showed production at U.S. factories surged in July. Investors are looking for signs about when the Fed will rein in its easy money policies, with minutes from the central bank’s latest meeting due on Wednesday, and are watching the resurgence in COVID-19 cases and its impact on the economy. In other company news, Walmart Inc shares were little changed after the retailer increased its annual U.S. same-store sales forecast after beating analysts’ estimates. Declining issues outnumbered advancing ones on the NYSE by a 3.77-to-1 ratio; on Nasdaq, a 3.22-to-1 ratio favored decliners. The S&P 500 posted 38 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 36 new highs and 305 new lows. Reporting by Lewis Krauskopf in New York, Devik Jain and Ambar Warrick in Bengaluru; Editing by Maju Samuel Our Standards: The Thomson Reuters Trust Principles.