WASHINGTON (

TheStreet

) -- Wholesale inventories fell for the 10th straight month in June, although sales edged higher.

The Commerce Department announced on Tuesday that wholesale inventories fell 1.7% during the month, nearly double the 0.9% decrease economists forecast.

The news sent the Dow down 1% to 9,243.71. It was at 9,279 right before the release. The S&P 500 fell 1% to 995.26 and the Nasdaq declined 1% to 1,968.54.

But there was an encouraging note: sales rose 0.4% for the second consecutive month as retailers cleaned out inventory.

These lower inventories could bode well for the second half of the year, creating some pent-up demand as the economy eases into recovery.

-Reported by Jeanine Poggi in New York.

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