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* Futures: Dow down 0.12%, S&P 500 down 0.34%, Nasdaq off

0.69%

May 12 (Reuters) - U.S. stock index futures edged lower

on Tuesday as a rally in chip stocks lost steam and hopes for a

quick resolution to the Middle East war faded, while investors

looked ahead to a key inflation report.

President Donald Trump said a ceasefire with Iran was "on

life support" after Tehran rejected a U.S. proposal to end the

conflict.

Although a strong earnings season has helped bolster market

sentiment, the lack of progress in negotiations between

Washington and Tehran remains a concern for market watchers as

surging oil prices fuel worries of higher inflation.

A consumer inflation report due at 8:30 a.m. ET is expected

to draw close scrutiny for signs of broader price pressures. The

consumer price index is forecast to have risen 0.6% last month,

after a 0.9% jump in March, according to a Reuters survey of

economists.

"The risks are skewed to a hotter-than-expected increase in

prices, and while headline numbers may not move the dial, a

higher-than-forecast core number could at least put a temporary

brake on market optimism," said Derren Nathan, head of equity

research, Hargreaves Lansdown.

Markets are no longer pricing in policy easing in 2026 after

rapid repricing in recent weeks. Ahead of the war, traders had

expected two rate cuts, per FedWatch, and briefly priced in

chances of a rate hike about a month into the conflict.

Producer prices and retail sales data are also due this

week, with investors turning to macroeconomic cues as the

first-quarter earnings season draws to a close.

At 05:45 a.m. ET, Dow E-minis were down 61 points,

or 0.12%, S&P 500 E-minis were down 25.5 points, or

0.34%, and Nasdaq 100 E-minis were down 203.5 points, or

0.69%.

All three major U.S. stock indexes advanced on Monday, with

the S&P 500 and the Nasdaq notching fresh record

closing highs, supported by continued optimism around artificial

intelligence and the health of Corporate America.

That AI-linked momentum cooled on Tuesday, with most chip

stocks trading lower before the bell.

Among other movers, Hims & Hers Health ( HIMS ) tumbled

14.6% after the telehealth firm missed Wall Street estimates for

first-quarter revenue and posted a surprise loss.

(Reporting by Ragini Mathur in Bengaluru; Editing by Devika

Syamnath)