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NEW YORK — Disgruntled investors sold stocks lower Tuesday, suffering a letdown after Federal Reserve Chairman Alan Greenspan suggested interest rates will fall by a smaller amount than Wall Street wants. 

Greenspan’s remarks before a Senate committee overshadowed a retail sales report that indicated the economy isn’t quite as weak as the market has feared. Investors are worried that smaller rate cuts will take longer to reinvigorate the economy. 

“That’s sort of disappointing the markets,” said Hugh Johnson, chief investment officer for First Albany Corp. 

The market saw Greenspan’s testimony as a sign to sell and lock in recent profits. Investors had been expecting the Fed, which in January twice dropped rates a half point, to lower rates by another half point in March. But analysts said the market is now concerned that the Fed might implement only a quarter-point adjustment, giving the economy less stimulus. 

“Investors are just a little less convinced that we are going to get the (economic) recovery that he is forecasting,” Johnson said. 

While Greenspan, who testified before the Senate Banking, Housing and Urban Affairs Committee, said he believes the economy will improve in the second half of the year, investors are less sure, Johnson said. 

“If the markets saw a recovery in the economy and earnings coming, we would have strong markets today,” Johnson said. 

A positive sign for the economy came earlier from the Commerce Department’s report that retail sales rose 0.7 percent during January, slightly ahead of analysts expectations and the biggest jump in four months. Consumers spent on a wide variety of goods, from cars to clothes to building supplies. 

The retail report “was an important piece of evidence to show the economy is not spiraling down into a recession,” said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co. 

— The Associated Press 

Other blue chips fell as the retail spending news couldn’t compensate for investors’ disappointment over Greenspan’s testimony and their fears about the anemic economy. Citigroup slipped 86 cents to $54.59, and Coca-Cola lost 86 cents to close at $59.96. 

Most market analysts have been expecting lower borrowing costs to boost economic growth in the second half of the year, especially in the long-battered tech sector. 

Still, tech stocks, which have mostly suffered the weakest earnings in the slowing economy, trended lower on Tuesday. Intel lost $2.13 to close at $32.44, and Microsoft fell 56 cents to $58.19. But Hewlett-Packard rose 60 cents to $33.20. 

Advancing issues narrowly outnumbered decliners 16 to 15 on the New York Stock Exchange. Consolidated volume was 1.27 billion shares, compared with 1.23 billion at the same point Monday. 

The Russell 2000 index, which tracks the performance of smaller company stocks, finished down 2.78 at 502.57. 

Stocks closed lower in overseas trading. Japan’s Nikkei index fell 1.1 percent, Britain’s FT-SE 100 index slipped 0.2 percent, Germany’s lost 0.1 percent and France’s CAC-40 index declined 0.4 percent. 

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