Dow Jones slides over 500 points after hot consumer prices data

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, Citigroup and Wells Fargo are scheduled to report.

At 9:38 a.m. ET, the 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 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 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.