U.S. stock indexes fell on Tuesday as investors turned cautious ahead of a key inflation reading this week, while dour earnings forecasts from companies such as PayPal and Apple supplier Skyworks weighed on the mood.

Shares of PayPal Holdings dropped 12% and led declines on the benchmark S&P 500 index after the company cut its margin forecast. They were also among the top drags on the Nasdaq Composite index.

Skyworks Solutions Inc shares slid 5.9% after forecasting current-quarter revenue and earnings below estimates.

Shares of other Apple suppliers including Qualcomm, Broadcom, Qorvo and Corning fell between 1.2% to 2%. The Philadelphia SE Semiconductor Index was down 2.1%.

The action-packed week will see the release of the much-awaited inflation data on Wednesday. The Labor Department's consumer price index (CPI) is expected to climb 0.4% in April after gaining 0.1% in March.

Reports on producer prices, weekly jobless claims and consumer sentiment are also lined up for the week.

"It is the CPI print tomorrow, and that's worrying markets, that it could be higher than expected or stickier inflation than expected," said Keith Buchanan, senior portfolio manager at GLOBALT Investments.

"And the loan officer survey showed that credit conditions are tightening. That seems like the case is being made that (rates) can stay higher for longer."

Credit conditions for U.S. businesses and households continued tightening in the first months of the year, according to a Fed survey, marking the accumulating impact of Fed monetary tightening.

Markets further awaited an update on the debt ceiling from a meeting between U.S. President Joe Biden, Republican House Speaker Kevin McCarthy and other congressional leaders at the White House later in the day.

Worries of a potential government default loom over Washington as early as June 1, if Congress does not act to resolve the deadlock.

At 12:42 p.m. ET, the Dow Jones Industrial Average was down 81.53 points, or 0.24%, at 33,537.16, the S&P 500 was down 19.46 points, or 0.47%, at 4,118.66, and the Nasdaq Composite was down 78.10 points, or 0.64%, at 12,178.82.

Boeing Co rose 1.1% after budget carrier Ryanair Holdings Plc placed a multi-billion dollar order for Boeing jets.

Regional bank shares extended declines, with the KBW Regional Banking index down 1.7% after falling 2.8% on Monday. The KBW Banking index shed 1%, extending losses after edging 0.2% lower in the previous session.

Novavax surged 37.2% as the drugmaker plans a 25% cut to its global workforce.

Under Armour Inc lost 6.3% as the sports apparel maker saw its annual sales and profit below street expectations.

Dialysis services provider DaVita Inc jumped 13.9% on raising its annual profit forecast as demand for procedures pickup in the U.S.

Declining issues outnumbered advancers for a 1.93-to-1 ratio on the NYSE and for a 1.77-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and 12 new lows, while the Nasdaq recorded 52 new highs and 130 new lows.

(Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Sonia Cheema and Anil D'Silva)