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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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Futures down: Dow 1.12%, S&P 1.28%, Nasdaq 1.43%

(Updated at 8:37 a.m. ET/ 1237 GMT)

By Shashwat Chauhan and Shristi Achar A

April 10 (Reuters) -

Wall Street's main stock indexes were set to open sharply

lower on Wednesday after a hotter-than-anticipated inflation

reading dampened hopes of the Federal Reserve kicking off the

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, and that's driven futures down because 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 yield on the 10-year note last at

4.4927%.

Traders slashed bets of the Fed cutting interest rates in

June after the CPI numbers. They now see the likelihood of an

interest-rate cut at the Fed's June 11-12 meeting as less than

50%, down from 58% before the report, based on the prices of

rate futures.

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 stance on cutting

interest rates.

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 Nasdaq and the S&P 500 posted modest

gains in the last session, although declining financial shares

weighed ahead of the unofficial start to the first-quarter

earnings season.

Banking giants JPMorgan Chase ( JPM ), Citigroup ( C/PN ) and

Wells Fargo ( WFC ) are scheduled to report towards the end of

the week.

At 8:37 a.m. ET, Dow e-minis were down 440 points,

or 1.12%, S&P 500 e-minis were down 67.25 points, or

1.28%, and Nasdaq 100 e-minis were down 262 points, or

1.43%.

Delta Air Lines ( DAL ) advanced 3.8% 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 1.8% 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.