(AP) — Wall Street is back to falling on Monday, ahead of a busy week with updates scheduled for how bad inflation is and how corporate profits are handling it. The S&P 500 closed 1.2% lower, while drops in tech stocks pushed the Nasdaq down 2.3%. The Dow lost 0.5%. Wynn Resorts and Las Vegas Sands slumped after COVID infections forced the shutdown of casinos in Macao. Twitter fell even more after billionaire Elon Musk said he wants out of his deal to buy the social media platform. In the bond market, a warning signal of recession continued to flash.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Wall Street is back to falling on Monday, ahead of a busy week with updates scheduled for how bad inflation is and how corporate profits are handling it.

The S&P 500 was 0.6% lower in afternoon trading, after earlier being down as much as 1.3%. The Dow Jones Industrial Average was virtually unchanged at 31,333 after erasing an earlier loss of 214 points. The Nasdaq composite was 1.5% lower, as of 2 p.m. Eastern time. All three indexes are coming off a rare winning week.

Stocks of smaller companies were slumping more than the rest of the market, with the Russell 2000 index down 1.5%, as worries about a possible recession continue to dog markets. The highest inflation in four decades is pushing central banks around the world to hike interest rates, which puts the clamps on the economy and pushes downward on all kinds of investments.

Parts of the economy are slowing already, from manufacturing to housing, though the still-hot jobs market remains a notable exception.

COVID also continues to have a hold on the global economy. An outbreak of infections is forcing casinos in the Asian gambling center of Macao to shut for at least a week. That sent Wynn Resorts and Las Vegas Sands down more than 7% apiece for some of the largest losses in the S&P 500.

Twitter was down even more, 9%, in the first trading after billionaire Elon Musk said he wants out of his deal to buy the social media platform for $44 billion. Twitter said it will take Musk to court to uphold the agreement.

Other big technology companies were also particularly weak. It’s a continuation of this year’s trend, where rising rates most hurt the investments that soared highest earlier in the pandemic.

In the bond market, a warning signal is continuing to flash about a possible recession. The yield on the 10-year Treasury slid to 2.99% from 3.09% late Friday as investors moved dollars into investments seen as holding up better in a downturn. It remains below the two-year Treasury yield, which fell to 3.06%.

Such a thing doesn’t occur often, and some investors see it as a sign that a recession may hit in the next year or two. The 10-year yield has been below the two-year yield since last week.

In the stock market, utilities and other companies that don’t need a strong economy to thrive were among the minority to rise and limit Wall Street’s losses.

Whether a recession comes or not, investors likely need to brace for much more volatile markets than they’ve become accustomed to over the last 40 years, strategists at BlackRock said Monday.

For decades, an era of “Great Moderation” smoothed out swings in economic growth and inflation and rewarded investors for “buying the dip” whenever prices dropped. Now, with production constraints driving inflation higher, high debt levels weighing on economies and “the hyper-politicization of everything” affecting policy decisions, BlackRock strategists say they’re expecting more volatility and shorter time periods between recessions.

“The Goldilocks option is now off the table,” where stocks and bonds can rise in concert, said Wei Li, global chief investment strategist at BlackRock Investment Institute.

The BlackRock strategists say they prefer stocks over bonds for the long term, but that they’re nevertheless shying away from stocks for the next six to 12 months. One reason is that profit margins for companies are at risk of falling from their historically high levels.

Companies this week are set to begin reporting how their profits fared during the spring. Big banks and other financial companies dominate the early part of the schedule, with JPMorgan Chase and Morgan Stanley set for Thursday. BlackRock, Citigroup and Wells Fargo are among those reporting on Friday.

PepsiCo is scheduled to report on Tuesday, with Delta Air Lines on Wednesday.

Expectations for second-quarter results seem to be low. Analysts are forecasting 4.3% growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.

Even if companies end up reporting better results than expected, which is usually the case, analysts say the heavier focus will be on what CEOs say about their profit trends for later in the year.

The roughly 19% drop for the S&P 500 this year has been due entirely to rising interest rates and changes in how much investors are willing to pay for each $1 of a company’s profit. So far, expectations for corporate profits have not come down much. If they do, that could lead to another leg downward for stocks.

Many on Wall Street expect those expectations to come down. Companies are already facing challenges in high inflation and the potential for weaker demand from customers overwhelmed by rising prices.

The recent rise of the U.S. dollar against other currencies adds another risk on top, according to Michael Wilson, equity strategist at Morgan Stanley.

One euro is worth very close to $1 now, down 15% from a year earlier, for example. That means sales made in euros may be worth fewer dollars than before.

“The main point for equity investors is that this dollar strength is just another reason to think earnings revisions are coming down over the next few earnings seasons,” Wilson wrote in a report.

Beyond earnings updates, reports this week on inflation will likely dominate trading. On Wednesday, economists expect a report to show that inflation at the consumer level accelerated again last month, up to 8.8% from 8.6% in May.

On Thursday, economists expect a report to show that inflation at the wholesale level remained at 10.8% last month.