NEW YORK (Reuters) -Wall Street turned lower on Tuesday, a day ahead of major inflation data, weighed down by financial stocks as investors braced for major U.S. banks to kick off earnings reporting season on Friday.

The mood soured by mid-morning as all three major U.S. stock indexes turned modestly red, led by the blue-chip Dow Jones Industrial Average.

"Equity markets are marking time between major macroeconomic data points and the beginning of first-quarter reporting season," Bill Northey, senior investment director at U.S. Bank Wealth Management in Billings, Montana. "We're still very close to all-time highs in equity markets and this is primarily a pause in advance of those key data points."

JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, due to report results on Friday, were the three heaviest drags on the S&P Banking index which was down 0.5%.

"The financials kick off first-quarter reporting season and often set the tone," Northey added. "We are looking to the cyclical areas as an indicator of the health of corporate America."

Wednesday's hotly anticipated Consumer Price Index (CPI) is at the top of most investors' minds as they tweak expectations on the timing and extent of the Federal Reserve's rate-cutting phase, following robust economic data such as last Friday's blockbuster employment report.

While analysts expect inflation is continuing to meander down toward the U.S. central bank's 2% goal, the National Federation of Independent Business reported on Tuesday that small business optimism touched an 11-year low in March, with inflation as the most pressing concern.

At 2:10 p.m. ET, the Dow Jones Industrial Average fell 135.9 points, or 0.35%, to 38,756.9, the S&P 500 lost 15.63 points, or 0.30%, to 5,186.76 and the Nasdaq Composite dropped 26.98 points, or 0.17%, to 16,226.97.

Of the 11 major sectors in the S&P 500, financials were down the most, while real estate enjoyed the biggest percentage increase.

Analysts are expecting aggregate S&P 500 first-quarter earnings growth of 5.0% year-on-year, down from 7.2%.

Cryptocurrency and blockchain-related stocks declined, tracking falling bitcoin prices. Exchange operator Coinbase Global and software company MicroStrategy dipped 5.0% and 5.8%, respectively.

Moderna was a bright spot, jumping 5.8% after the drugmaker's individualized cancer vaccine developed with Merck showed promise in an early-stage trial.

Advancing issues outnumbered decliners on the NYSE by a 1.10-to-1 ratio; on Nasdaq, a 1.16-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 51 new highs and 64 new lows.

(Reporting by Stephen Culp; Additional Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru)