© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 7, 2023. REUTERS/Brendan McDermid

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -Wall Street’s main indexes fell on Wednesday ahead of a key inflation report this week, with investors also assessing remarks from U.S. Federal Reserve officials.

Rate-sensitive megacap growth and technology stocks, that have led the Wall Street rally this year, such as Nvidia (NASDAQ:), Apple (NASDAQ:) and Tesla (NASDAQ:) were down between 1.3% and 4.6%.

“We think that at this point there is some profit taking and retrenchment in the short term on the card,” said Aadil Zaman, partner at Wall Street Alliance Group.

Philadelphia Fed President Patrick Harker said on Tuesday the U.S. central bank may be at the stage where it can leave interest rates unchanged, barring any abrupt change in the direction of recent economic data.

However, Fed Governor Michelle Bowman on Monday said the combination of still-elevated inflation and continued economic growth meant further rate increases are likely.

Traders expect an 86.5% chance of no rate hike at the Fed’s next policy meeting in September, according to CME FedWatch Tool.

The Consumer Price Index (CPI) for July, due on Thursday, is expected to show a slight year-over-year acceleration. On a month-to-month basis, consumer prices are seen increasing 0.2%, the same rate as in June.

“CPI won’t be major surprise. It’s going to be either matching expectations most likely or slightly better than expectation, showing that inflation is cooling off,” Zaman added.

Wall Street’s main indexes ended the previous session lower in a broad selloff after the downgrading of several small and mid-sized banks by credit rating agency Moody’s (NYSE:).

Big banks extended losses on Wednesday, with Bank of America (NYSE:) and Wells Fargo (NYSE:) down 1.0% and 1.5%, respectively.

Adding to concerns about the global economy, China’s consumer sector fell into deflation and factory-gate prices extended declines in July, as the world’s second-largest economy struggled to revive demand.

At 11:33 a.m. ET, the was down 154.86 points, or 0.44%, at 35,159.63, the was down 27.85 points, or 0.62%, at 4,471.53, and the was down 164.88 points, or 1.19%, at 13,719.44.

Seven of the top 11 S&P 500 sectors rose, led by gains in energy stocks, that increased 1.6%, touching a near six-month high, tracking a jump in prices. [O/R]

Casino owner Penn Entertainment’s shares jumped 7.6% on a $2 billion deal with Walt Disney (NYSE:)’s ESPN to launch a sports betting business.

Walt Disney’s shares rose 0.8% ahead of its quarterly results due after the bell.

Lyft (NASDAQ:) signaled it would double down on competitive pricing to catch up with rival Uber (NYSE:), taking the shine off its strong earnings forecast and sending the company’s shares down 5.4%.

Of the 443 S&P 500 companies that have reported results as of Tuesday, 78.6% beat analyst expectations, according to Refinitiv data.

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and a 1.65-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and five new lows, while the Nasdaq recorded 47 new highs and 131 new lows.