Updates before market open

By Ragini Mathur and Utkarsh Hathi

May 12 (Reuters) - Wall Street stock index futures pointed to a lower open on Tuesday, as investors weighed a hotter-than-expected inflation report and fading hopes for a swift resolution to the Middle East conflict.

U.S. consumer prices rose at a brisk pace for a second straight month in April, pushing annual inflation to its highest level in nearly three years and reinforcing expectations that the Federal Reserve will keep interest rates unchanged for longer.

The Consumer Price Index increased 3.8% last month on an annual basis, while economists polled by Reuters had expected a 3.7% rise.

"We believe the financial markets have been a little slow to appreciate the economic damage that is building with higher prices, oil prices, raw materials, all those things that could accelerate global inflation," said Doug Beath, global equity strategist, Wells Fargo Investment Institute.

"April had the highest S&P 500 returns since 2020. Obviously, earnings continue to exceed expectations. But I do think even though it (CPI) is a little bit higher than expected, it could be more important because of the fact the negotiations are still in limbo."

President Donald Trump said a ceasefire with Iran was "on life support" after Tehran rejected a U.S. proposal to end the conflict, keeping oil prices elevated as the key Strait of Hormuz shipping route remained closed.

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.

Ahead of the war, traders had expected two rate cuts, per CME Group's FedWatch Tool, but currently expect the Federal Reserve to keep interest rates steady through the end of the year.

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 08:59 a.m. ET, Dow E-minis YMcv1 were up 21 points, or 0.04%, and S&P 500 E-minis EScv1 were down 17.75 points, or 0.24%. Nasdaq 100 E-minis NQcv1 were down 202.5 points, or 0.69%.

All three major U.S. stock indexes advanced on Monday, with the S&P 500 .SPX and the Nasdaq .IXIC 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.

Intel INTC.O shares eased 3.8% after climbing more than 17% in the previous two sessions.

Among other movers, Hims & Hers Health HIMS.N tumbled 15% after the telehealth firm missed Wall Street estimates for first-quarter revenue and posted a surprise loss.

Venture Global VG.N rose 8.3% after the LNG exporter raised its annual adjusted core profit forecast.