US STOCKS-Wall St set to open lower after sharp rally on Trump tariff reversal

• Futures down: Dow 1.48%, S&P 500 1.98%, Nasdaq 2.45%
• GM, Ford downgraded by brokerages UBS, Goldman Sachs
• Capri Holding rises after Prada agrees to buy Versace

April 10 (Reuters) - Wall Street's main indexes were set to open lower on Thursday, coming off a blistering rally following U.S. President Donald Trump's move to temporarily lower the heavy tariffs on dozens of countries.

The U-turn came less than 24 hours after steep new tariffs took effect on most trading partners, lifting the S&P 500 .SPX to its biggest single-day percentage gain since 2008. The Nasdaq .IXIC posted its biggest one-day jump since 2001.

Trump also announced a 90-day pause on many of his new reciprocal tariffs, but raised them to 125% on Chinese imports from 104% on Wednesday. Beijing had slapped 84% tariffs on U.S. imports to match Trump's earlier levy.

"The trade war is now turning into a direct confrontation between the U.S. and China...," Rabobank analysts said. "We could again be seeing escalation and de-escalation at the same time, pulling markets in different directions."

The European Union said it had agreed on a 90-day pause on counter tariffs on U.S. goods, which were due on April 15.

Futures came off their session lows after data showed the consumer price index unexpectedly dipped 0.1% in March and advanced 2.4% in the 12 months through March.

Economists polled by Reuters had forecast the CPI to rise 0.1% for the month and climb 2.6% year-on-year.

"(The CPI data) increases the chances that the Fed can cut rates at some point, either due to the tariffs or due to the jobs market, because inflation's coming down," said Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report.

Traders now see nearly 90 basis points of interest-rate cuts in 2025, according to LSEG data.

At 08:43 a.m. ET, Dow E-minis 1YMcv1 were down 606 points, or 1.48%, S&P 500 E-minis EScv1 were down 108.75 points, or 1.98% and Nasdaq 100 E-minis NQcv1 were down 472.25 points, or 2.45%.

Despite Wednesday's surge, the S&P 500 and the Dow .DJI are about 4% below levels seen before the reciprocal tariffs were announced last week.

Most megacap and growth stocks slid in premarket trade after recording robust gains in the last session, with Tesla TSLA.O and Nvidia NVDA.O down more than 3% each.

Meanwhile, U.S. bonds markets were sanguine after a sharp selloff in the last session, with the yield on the 10-year note US10UY=RR dropping to 4.315% from its February peaks.

The CBOE Volatility Index .VIX - seen as Wall Street's "fear gauge" - fell from its August highs and was last at 37.17 points.

Among individual shares, automakers General Motors GM.N and Ford F.N fell about 4% each after the previous session's gains. Downgrades from UBS and Goldman Sachs on the stocks added to their declines.

Capri Holdings CPRI.N jumped 5.3% after Prada 1913.F said it has struck a deal to buy smaller rival Versace from the Michael Kors-parent. The deal has an enterprise value of $1.375 billion.

Investors will keep a close watch on comments from at least six Fed officials who are also set to make public appearances throughout the day.

U.S. earnings season could also offer more insights into the health of corporate America. Big banks such as JPMorgan Chase JPM.N will report first-quarter results on Friday.

Despite Wednesday's rally, Wall Street still below last week's levels