STORY: Wall Street's main indexes closed lower on Tuesday as investors awaited key inflation data that could influence the Federal Reserve's decision on interest rates next week.

The Dow, S&P 500 and Nasdaq all dropped between roughly one-third to one-quarter of a percentage point.

The Consumer Price Index, due on Wednesday, is expected to show the monthly inflation rate hovering around 2.7% - above the Fed's 2% target.

While most investors are betting on a Fed rate cut next week, Brian Krawez, president and lead portfolio manager at Scharf Investments, thinks those cuts could be fewer and farther between in 2025.

"Investors might be disappointed that the Fed's pace slows down a bit in terms of cuts. Particularly, if you have more tariffs and other policy changes that help to accelerate inflation in (20)25. So, we think the CPI report coming out tomorrow will be important for investors, but the real story won't be known until we head into next year."

Stocks on the move Tuesday included Kroger, which gained 5% after a federal judge blocked its proposed acquisition of rival grocer Albertsons. Shares of Albertsons closed lower.

Shares of Walgreens Boots Alliance rallied nearly 18% after reports that it is in talks to sell itself to private equity firm Sycamore Partners.

Shares of Google-parent Alphabet climbed more than 5% after the tech giant unveiled a new generation chip for quantum computing.

On the downside, shares of Oracle slid more than six-and-a-half percent a day after the cloud computing company missed Wall Street estimates for second-quarter results.

And shares of luxury homebuilder Toll Brothers fell roughly 7% after its quarterly results beat expectations but its current quarter forecasts disappointed investors.