US STOCKS-Wall St falls as energy shares decline

* S&P energy index falls with Brent crude oil futures

* July construction spending hits 5 1/2 year high

* Dollar General ups Family Dollar bid

* Digital Ally (NasdaqCM: DGLY - news) shares extend rally

* Indexes: Dow off 0.47 pct, S&P off 0.38 pct, Nasdaq up 0.02 pct (Updates to mid-afternoon, adds details on energy shares, updates quote, changes byline)

By Akane Otani

NEW YORK, Sept 2 (Reuters) - U.S. stocks were mostly down on Tuesday, retreating from record highs set the previous month, as energy shares were hit by the fall in crude oil to a 15-month low.

The S&P energy index lost 1.7 percent as Brent crude oil futures fell to their lowest level in 15 months. Noble Corp (NYSE: NE - news) was the biggest loser among the S&P energy names, falling 3.3 percent, while Ensco PLC (NYSE: ESV - news) fell 3.1 percent.

The dollar's strength was also seen as hurting energy shares as it was partly responsible for oil's decline. Brent crude was down 2.2 percent to $100.46 a barrel on Tuesday.

Home Depot Inc shares were the worst performer in the Dow industrials, falling 3 percent to $90.16 a share after CNBC reported that hackers may have stolen credit-card data.

The weakness in energy overshadowed strong reports on U.S. manufacturing and construction. U.S. factory activity soared to its highest level in nearly 3-1/2 years in August and construction spending rebounded strongly in July.

Despite positive readings on the economic front, stocks were mostly down. The Dow Jones industrial average fell 79.56 points, or 0.47 percent, to 17,018.89. The S&P 500 was down 7.62 points, or 0.38 percent, to 1,995.75. The Nasdaq Composite added 0.99 points, or 0.02 percent, to 4,581.27.

"Clearly the market was not impressed by the morning's data points," said Lawrence Glazer, managing partner at Mayflower Advisors in Boston.

"While U.S. factory activity was better than what a lot of people had been expecting, the market had been moving up in anticipation of much of this data, and we have the stronger dollar hurting energy stocks."

Digital Ally Inc shares soared 62.4 percent to $30.31, extending a meteoric rally that has pushed the stock up more than 900 percent since a 52-week low on June 10. Shares (Frankfurt: DI6.F - news) have traded in record volume in recent days, as outrage over the shooting of an unarmed black teenager in Ferguson, Missouri, has fueled interest in the use of wearable cameras among law enforcement.

Electric carmaker Tesla Motors Inc (Xetra: A1CX3T - news) jumped 4.9 percent to $283.01 after Stifel Nicolaus raised its target price for the company's stock to $400. Tesla shares were on track to close at a record high.

Merger activity continued to flourish. Discount retailer Dollar General Corp raised its bid for Family Dollar Stores Inc by 2 percent to $80 per share, or $9.1 billion. Family Dollar shares edged up 0.5 percent to $80.23 while Dollar General advanced 0.6 percent to $64.39. (Reporting by Akane Otani; Editing by Chizu Nomiyama and Nick Zieminski)