After a report reveals the highest inflation since '81, the S&P 500 and Nasdaq fall for a third consecutive day, reversing earlier gains.

On Tuesday, stocks dropped after an initial rise in the morning was followed by selling as investors evaluated the latest U.S. inflation data, which indicated another significant price increase for the previous month.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all experienced declines for a third consecutive trading day, with the S&P 500 falling 0.34%, the Nasdaq Composite dropping 0.30%, and the Dow Jones Industrial Average declining 0.26%.

The major averages began the session with sharp increases, with the Dow rising as much as 361.89 points, or about 1.1%. The S&P 500 and Nasdaq also experienced significant gains, up as much as 1.3% and 2%, respectively, at their highs of the day. Despite this, Wall Street was still trying to recover from the steep losses it had suffered in the previous session.

In March, consumer prices increased by 8.5% compared to the previous year, exceeding expectations and reaching their highest levels since 1981, according to data from the Labor Department. Meanwhile, core CPI, which excludes food and energy prices, rose less than expected, with a 0.3% increase in March, while economists predicted a 0.5% gain. On an annual basis, core prices increased by 6.5%.

The expectation of tighter monetary policy from the Federal Reserve, resulting from high inflation numbers, has caused investors to fear that it could slow the economy. The Fed raised rates at its March meeting and is predicted to increase them further throughout the year.

According to Wharton School finance professor Jeremy Siegel, who spoke on CNBC's "Halftime Report" on Tuesday, the Fed must continue with at least 50-basis-point hikes for several meetings in order to slow inflation, which is still moving through the system. One basis point equals 0.01 percentage points.

For "many months to come," Siegel predicts that inflation will remain high.

The 10-year Treasury yield decreased after the CPI report, as traders believed the core reading might indicate inflation is slowing down. The benchmark note dropped over 6 basis points to approximately 2.72%.

After rising at the start of the day, tech stocks lost their gains and Microsoft and Nvidia both dropped by 1.1% and 1.9%, respectively.

Amid a surge in oil prices, Tuesday's moves took place as China eased up on Covid lockdowns that would have hurt demand. The international benchmark Brent crude jumped 6.26% to settle at $104.64 per barrel, while West Texas Intermediate crude futures gained 6.69% to settle at $100.60 per barrel.

The energy sector followed oil prices higher, with Occidental Petroleum, Devon Energy, Marathon Oil, and Chevron all experiencing significant gains.

Earnings season is set to begin with JPMorgan and Delta Air Lines on Wednesday, and several big banks will follow on Thursday, as investors eagerly await this period.