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Updates through late morning trade

By Lisa Pauline Mattackal and Purvi Agarwal

April 28 (Reuters) - Wall Street turned lower on Monday, dragged down by megacap stocks, while investors braced for a week packed with key economic data and earnings from some of the biggest U.S. companies.

The tech-heavy Nasdaq led declines, as megacap stocks lost ground. Tesla TSLA.O fell 3.2% and AI-darling Nvidia NVDA.O dipped 3.6%.

A report said China's Huawei Technologies was preparing to test its artificial-intelligence processor, which it hopes would replace some of Nvidia's products.

Other megacaps also fell, ahead of a busy week of corporate earnings.

Apple AAPL.O and Meta Platforms META.O are among the several "Magnificent Seven" heavyweight companies that will be reporting this week.

"We're going to have to live with higher volatility in the (tech) sector for a while, unless we get some really impressive de-escalation of the trade with China situation," said Bill Sterling, global strategist at GW&K Investment Management.

With 180 S&P 500 companies preparing to report results this week, investors will be watching for indications on how U.S. President Donald Trump's new tariffs could impact the outlook of the companies.

Though first-quarter earnings from S&P 500 companies are expected to climb 9.7% from a year ago, according to LSEG IBES, many firms have flagged the uncertainty caused by the U.S. trade policy, with some cutting or pulling annual forecasts.

Crucial economic data, including the monthly U.S. payrolls and the personal consumption expenditures price index, is also on the roster.

At 11:43 a.m. ET, the Dow Jones Industrial Average .DJI fell 2.29 points, or 0.01%, to 40,111.21, the S&P 500 .SPX lost 25.33 points, or 0.46%, to 5,499.87 and the Nasdaq Composite .IXIC lost 155.44 points, or 0.89%, to 17,227.50.

Gains in Boeing BA.N after Bernstein's rating upgrade limited losses for the Dow, while the technology sector .SPLRCT fell 1.3%, leading sector declines.

Trading was volatile, with the S&P 500 and the Nasdaq briefly touching their highest levels since April 2, prior to Trump's "Liberation Day" tariff announcement.

Signs that the U.S. and China could be willing to de-escalate trade tensions had injected some optimism in markets last week, with the three main indexes ending Friday with weekly gains.

Though markets have welcomed signs that the U.S. is softening its stance, it is too soon to tell what the outcome of any negotiations would be, Sterling said.

A lack of clarity on the negotiations between the two countries has kept the market on edge.

The S&P 500 .SPX remains over 10% off its February record high, as markets assess the potential impact of tariffs.

A majority of economists polled by Reuters said the risks of the global economy slipping into recession this year were high.

Spirit AeroSystems SPR.N rose 2.6% after Airbus AIR.PA reached a deal to take over some of the company's plants.

Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE. Declining issues outnumbered advancers by a 1.27-to-1 ratio on the Nasdaq.

The S&P 500 posted three new 52-week highs and one new low, while the Nasdaq Composite recorded 33 new highs and 30 new lows.

(Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)

((LisaPauline.Mattackal@thomsonreuters.com;))