The Nasdaq Composite dropped 1.1% to 21,467.2, with the S&P 500 down 0.6% to 6,461.1, and the Dow Jones Industrial Average 0.2% lower at 45,546.6. Technology and consumer discretionary led the decliners.

On the inflation front, the personal consumption expenditures price index increased 0.2% in July, as expected, following a 0.3% rise in June. Year-over-year, headline inflation rose 2.6% for the second consecutive month, matching the gain back in February, as per a Stifel research note.

Excluding food and energy, the core PCE rose 0.3% in July, as expected, following a similar increase in June. Over the past 12 months, core inflation increased 2.9% in July -- the largest annual gain since February, as per the Stifel note -- compared with 2.8% in June.

Meanwhile, the University of Michigan consumer sentiment index was revised lower to 58.2 for August from its preliminary estimate of 58.6, versus expectations for no revision in a survey compiled by Bloomberg. The August print lagged the final reading of 61.7 in July.

Respondents in the Michigan survey expected a 4.8% inflation rate over the next year and 3.5% annual inflation over the next five years, up from 4.5% and 3.4% respectively, in July.

Treasury yields were mixed after midday, with the 10-year yield up 1.2 basis points to 4.22% while the two-year rate slipped 2.2 basis points to 3.61%.

In company news, Autodesk (ADSK) shares jumped 8.9%, the top performer in the S&P 500 and the Nasdaq, after the company posted higher fiscal Q2 non-GAAP net income and revenue, and raised its fiscal 2026 outlook.

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