The Nasdaq Composite and the S&P 500 fell Thursday from their record closing levels as markets evaluated consumer inflation data for June and awaited the latest financial results from major banks set for Friday.
The Nasdaq dropped 2% to 18,283.4, and the S&P fell 0.9% to 5,584.5 after extending rallies to all-time highs on Wednesday. The Dow Jones Industrial Average rose 0.1% to 39,753.8. Technology and communication services posted the steepest declines among sectors, while real estate led the gainers.
In economic news, the US consumer price index fell 0.1% in June after being unchanged the month before, according to the Bureau of Labor Statistics. Analysts were expecting a 0.1% gain, according to a Bloomberg survey. Annually, inflation slowed to 3% last month from May's 3.3%, cooling more than the 3.1% consensus.
"This better-than-expected inflation reading opens the door wide open for a September rate cut from the (Federal Reserve)," BMO said in a note. "The report makes a very convincing case that consumer inflation has swiftly resumed its downward path after an unanticipated surge in the first quarter and is likely well on its way to a sustainable 2%."
Official US producer price data for June are scheduled for Friday.
Fed Chair Jerome Powell said earlier this week that inflation in the US seems to have improved in recent months, and "more good data would strengthen" the case for potential monetary policy easing.
The US two-year yield tumbled 11.9 basis points to 4.51% Thursday, while the 10-year rate dropped 7.4 basis points to 4.20%.
Weekly applications for unemployment insurance in the US declined more than market expectations, government data showed.
West Texas Intermediate crude oil rose 1.2% to $83.08 a barrel.
In company news, Tesla (TSLA) shares slumped 8.4%, the biggest decline on the S&P and the Nasdaq. The electric vehicle maker is pushing back its robotaxi event to October from August to give project teams more time, Bloomberg reported.
Delta Air Lines (DAL) shares fell 4% after the carrier issued downbeat Q3 earnings guidance after Q2 profit trailed market expectations.
SBA Communications (SBAC) shares jumped 7.5%, the top gainer on the S&P. The real estate investment trust on Wednesday appointed Saul Kredi as chief accounting officer, succeeding Brian Lazarus, who will retire at the end of this year.
Banking giants JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are scheduled to report quarterly results on Friday.
Gold increased 1.7% to $2,419.90 per troy ounce, while silver jumped 2.2% to $31.70 an ounce.