Stock markets took a big hit Monday as investors sold off shares of U.S. companies and exited positions on the Japanese yen, which has been gaining in strength relative to the dollar following interest rate hikes by the Bank of Japan.

What will Tuesday have in store for Wall Street?

This from thepatriotjournal.com.

Last week, Dementia Joe confidently assured the nation The Regime’s policies had revived the struggling economy.

Taking full credit for what he described as a remarkable recovery, Joe declared:

I cured the economy.

With much fanfare, Joe’s comments came as part of a broader effort to bolster public confidence in his replacement, Dear Kamala. The media likewise has praised Kamala, but the unconvinced Left are frightened she will be defeated by Trump in November.

Dear Kamala also joined in the chorus of economic triumph, touting the Regime’s achievements. She claimed The Regime’s measures had “brought stability and growth.” Her remarks were meant to highlight the positive impact of their policies on the American people. However, the timing of these claims could not have been worse.

[L]iterally days later, the stock market opened to a massacre.

Stocks plunged on Monday as U.S. recession fears caused turmoil throughout the global markets.

The Dow Jones Industrial Average tumbled by as much as 1,300 points, while the Nasdaq Composite and S&P 500 also fell.

A weak jobs report and shrinking manufacturing activity in the world’s largest economy, coupled with dismal forecasts from the big technology firms, pushed the Nasdaq 100 and Nasdaq Composite into a correction last week.

President Trump warned that the country was on the brink of a collapse. Trump argued that the Biden-Harris regime’s policies were leading the nation down a dangerous path. “Kamala’s Crash,” as he dubbed it, was evidence of their failure to manage the economy effectively.

From Truth Social:

Market Experts Weigh In:

Market analysts were quick to offer their insights into the situation. They pointed to a combination of factors contributing to the market crash, including rising inflation, supply chain disruptions, and geopolitical tensions. These issues, they argued, had been exacerbated by [The Regime’s] policies, leading to increased uncertainty and volatility in the markets.

The dramatic market downturn has left many Americans questioning the true state of the economy. While [The regime] continues to assert that their policies are working, the reality on the ground tells a different story. As the nation grapples with the fallout from this market crash, it remains to be seen how [The Regime] will navigate the economic challenges that lie ahead.

The details:

The Dow Jones Industrial Average of big U.S. companies closed down 1,033 points or 2.6 percent. The S&P 500 index finished 3 percent down and the technology-heavy Nasdaq lost 3.4 percent in the sell-off.

Technology stocks, which have been soaring in recent months on enthusiasm for artificial intelligence, were hit particularly hard, with Nvidia Corp. down more than 6.7 percent on the day’s trading and Intel down more than 7 percent. Shares of major tech companies have faltered since last week after a string of lackluster earnings reports and layoff announcements.

The stock market downturn began Friday after the July jobs report showed slower job growth and higher unemployment than economists expected, stoking fear about the Federal Reserve’s high interest rates suffocating the U.S. economy.

As the losses accelerated Monday, investors pointed to the unwinding of “carry trades,” which are stock purchases using cheap foreign currency that has been borrowed and needs to be repaid, as the reason for the stock rout.

The Japanese yen had been cheap compared to the dollar due to super-low Japanese interest rates and elevated U.S. interest rates, falling as low as 160-to-1 earlier this summer.

But the yen has been gaining on the dollar since early July, ahead of an interest rate hike by the Bank of Japan to a 15-year high. The yen-to-dollar ratio has since strengthened to 144-to-1.

Investor Ed Yardeni, president of Yardeni Research, told The Hill:

A lot of speculators borrowed money in Japan at near-zero interest rates and then converted the yen they borrowed into other currencies to speculate around the world. And that was a great trade. It worked until it didn’t work. It stopped working when the Bank of Japan raised the cost of borrowing,

Treasury yields have dipped as investors have taken shelter in steadier government securities, with the return on the 2-year note falling below 4 percent for the first time in more than a year.

Joe Brusuelas, chief economist at RSM, wrote in an analysis:

As investors exited their positions in the yen, equity markets plunged, and yields fell across the Treasury curve as investors sought the safe haven of U.S. government securities.

Will there be a parachute to ease the fall?

In the event of a severe market price decline, U.S. exchanges have procedures, known as marketwide circuit breakers, that may halt trading temporarily or, under extreme circumstances, close the markets before the normal end of the trading session. The circuit breakers are calculated daily based on the prior day’s value of the S&P 500 index.

By late Monday morning, the market was not approaching circuit-breaker territory. The S&P 500 was around 5200—well above 4972.3, the tripwire for a Level 1 breaker.

The circuit breaker was last tripped 10 times in four days during a pandemic sell-off in 2020.

How much does the S&P 500 have to fall today to trigger circuit breakers?

Here are the three levels at which marketwide circuit breakers will be hit—and what happens if each one is breached:

◾ Level 1: 7% decline, or at 4,972.3 before 3:25 p.m.: Trading is halted for 15 minutes and then resumes unless level 3 is breached.

◾ Level 2: 13% decline, or at 4,651.5 before 3:25 p.m.: Trading is halted for 15 minutes and then resumes unless level 3 is breached.

◾ Level 3: 20% decline, or at 4,277.24 any time: Trading is halted for the remainder of the day.

Each circuit breaker can be triggered only once a day. For example, if a Level 1 market decline occurred and trading was halted and then reopened, the Exchange would not halt the market again unless a Level 2 decline occurred.