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March CPI at 3.5% YoY vs 3.4% estimate

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Delta Air Lines ( DAL ) gains on upbeat Q2 forecast

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Indexes down: Dow 1.34%, S&P 1.18%, Nasdaq 1.09%

(Updated at 9:38 a.m. ET/ 1338 GMT)

By Shashwat Chauhan and Shristi Achar A

April 10 (Reuters) - Wall Street's main stock indexes

tumbled on Wednesday after a stronger-than-anticipated inflation

reading dampened hopes of the Federal Reserve kicking off its

monetary easing cycle in June.

A Labor Department report showed the Consumer Price Index

(CPI) rose 0.4% on a monthly basis in March, compared with the

0.3% increase expected by economists polled by Reuters.

Annually, it increased 3.5%, versus a 3.4% estimated growth.

Excluding volatile food and energy components, the core

figure rose 0.4% month-on-month in March, against expectations

of a 0.3% advance. Annually, it gained 3.8%, versus the

estimated 3.7% increase.

"Data was hotter than expected, both on the top line and the

core number... it's indicative of sticky inflation and the

potential for the Fed to either cut fewer times or not at all in

2024," said Robert Pavlik, senior portfolio manager at Dakota

Wealth.

"I don't think it speaks to the need for a rate hike, but

stocks have to be re-priced for a different environment which is

presenting itself with this inflationary data."

Yields across government bonds spiked after the data was

released, with the 10-year note climbing back to

4.4806% - its highest level since last November.

Traders slashed bets of the Fed cutting interest rates in

June after the CPI report, estimating the central bank will wait

until September before cutting rates.

Minutes from the Fed's March meeting, where it stuck to its

guidance of three rate cuts this year, are due later in the day

and could be key in gauging the central bank's stand on policy

easing.

Atlanta Fed President Raphael Bostic said in an interview to

Yahoo Finance on Tuesday that it was possible the Fed may not

cut interest rates at all this year if the progress on inflation

stalls and the economy continues to outperform.

The first-quarter earnings season will pick up pace towards

the end of the week, when banking giants JPMorgan Chase ( JPM ),

Citigroup ( C/PN ) and Wells Fargo ( WFC ) are scheduled to report.

At 9:38 a.m. ET, the Dow Jones Industrial Average

was down 520.39 points, or 1.34%, at 38,363.28, the S&P 500

was down 61.30 points, or 1.18%, at 5,148.61, and the

Nasdaq Composite was down 177.10 points, or 1.09%, at

16,129.54.

All 11 S&P 500 sectors were trading in the red. The

rate-sensitive real estate led declines, falling 3.3%.

Among single stocks, Delta Air Lines ( DAL ) advanced 3.9%

after the carrier offered an upbeat outlook for the current

quarter and topped Wall Street estimates for first-quarter

earnings on buoyant travel demand.

U.S.-listed shares of Alibaba gained 2.8% after the

company's co-founder Jack Ma penned a lengthy memo to employees

on Tuesday, expressing support for the internet giant's

restructuring efforts - a rare move from the billionaire, who

has spent the last few years away from the spotlight.

Declining issues outnumbered advancers for a 13.86-to-1

ratio on the NYSE and for a 5.76-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and six new

lows, while the Nasdaq recorded 11 new highs and 75 new lows.