By Rodrigo Campos

NEW YORK, May 28 (Reuters) - U.S. stocks fell on Friday 28 May as data showed consumer spending was unexpectedly flat last month and growth in business activity in the U.S. Midwest slowed.

Investors jumped on the chance to book gains heading into a holiday weekend and after Wall Street's rally in the previous session.

Energy shares were among the biggest losers on Friday 28 May, a day after the S&P energy sector index .GSPE scored its largest gain in 14 months. Halliburton (HAL.N) dropped 7 percent to $25.09 and Schlumberger (SLB.N) fell 5.3 percent to $56.63.

"You have to take into consideration some digestion after yesterday's strong move," said Manny Weintraub, managing director at Integre Advisors in New York.

"Also, the economic factors that caused the decline for the month are still there," Weintraub said.

May is on track to be the worst month for stocks since February 2009 after hitting an 18-month high late last month as investors fretted over a debt crisis in Europe and its implications on global growth.

The Commerce Department said April was the first month since September that consumer spending did not increase, but the largest gain in real disposable income in nearly a year gave hope spending will resume in coming months.

The Dow Jones industrial average .DJI dropped 88.28 points, or 0.86 percent, to 10,170.71. The Standard & Poor's 500 Index .SPX fell 10.56 points, or 0.96 percent, to 1,092.50. The Nasdaq Composite Index .IXIC slid 23.12 points, or 1.02 percent, to 2,254.56.

Apple Inc (AAPL.O) shares rose 1.4 percent to $256.80 after Asian and European customers mobbed stores as the iPad tablet computer debuted outside the United States.

Bank of America Merrill Lynch raised its price target on the retail and technology bellwether by $25 to $325 and kept its "buy" rating.

Strong results from apparel retailer J Crew Group Inc (JCG.N), up 4.2 percent to $45.70, helped limit losses in retail stocks.

The Institute for Supply Management-Chicago business barometer dropped to 59.7 in May from 63.8 in April, and the employment component of the index sank to 49.2 from 57.2, indicating a contraction.

The Thomson Reuters/University of Michigan Surveys of Consumer showed consumer sentiment rose a bit in May from April but was roughly unchanged from levels since February, while the one-year inflation expectations index also climbed, to its highest since October 2008.

U.S. markets will be closed on Monday 31 May for the Memorial Day holiday. ( Editing by Padraic Cassidy)