Stocks fell as traders braced for a hot inflation reading and the start of a key earnings season that could reveal whether the economy is heading for a recession. The dollar increased in value.

Investors are watching to see if profits are holding up or if companies will cut forecasts significantly in the midst of a widespread confluence of economic challenges. The dichotomy between two major Wall Street forces is one reason for caution. Analysts are betting that corporate America will be able to pass on higher costs to consumers, even though many strategists are skeptical.

A sell-off in megacap stocks such as Tesla and Apple weighed heavily on trading. Twitter fell after Elon Musk backed out of a $44 billion deal to buy the company, setting the stage for a legal battle. The euro edged closer to parity with the US dollar, while 10-Yr US yields fell below 3%.

Even after a $18 trillion first-half wipeout in global equities, price pressures, a wave of monetary tightening, and a slowing economy have kept investors on the sidelines.