The S&P 500 closed lower on Wednesday, ending a month in which investors were persistently worried about inflation and elevated interest rates.

The S&P 500 fell 0.3% in New York, giving back an intraday gain that had reached 0.7% at one point.

The index declined 0.5% for September, its worst monthly showing since June.

The tech-heavy Nasdaq 100 rose 0.2% on Wednesday.

US equities traded higher for most of Wednesday's session after the Federal Reserve's preferred inflation gauge rose less than expected, reinforcing market expectations that the Fed will not raise rates in October.

The data also showed US consumer spending grew at its fastest pace in more than a year in August, providing momentum for economic growth amid persistent inflation.

Chris Osmond, Chief Investment Officer at Fifth Third Wealth Advisors, said Wednesday's data presented a "Goldilocks-like combination."

"Second-quarter economic growth was stronger than expected, consumer spending was more resilient, the labor market rebounded sharply in September, and the Fed's preferred inflation gauge came in well below expectations. This broadly supports risk assets and significantly reduces the likelihood of a rate hike in October."

Interest rate swaps showed traders priced in roughly a 36% probability that Fed officials would raise rates at their meeting in about a month, compared with roughly a coin-flip estimate before the PCE data was released.

The S&P 500 Industrials Index fell 1.3% on Wednesday, bringing its cumulative decline from a record high touched in mid-August to more than 10%, entering correction territory.

Micron Technology reported earnings after the close, with the largest US memory chip maker issuing current-quarter sales guidance that exceeded market estimates, buoyed by AI infrastructure buildout driving chip demand to unprecedented levels.

At the close, the S&P 500 fell 0.3% to 7,651.54; the Dow Jones Industrial Average dropped 0.9% to 50,906.05; the Nasdaq Composite gained 0.2% to 26,861.06; the Nasdaq 100 rose 0.2% to 30,408.5; and the Russell 2000 declined 0.4% to 2,796.864.