It’s nail-biting time on Wall Street.

Stocks had been dropping at worrisome rates for several days, but on Monday things went from concerning to panicky. At one point, the Dow Jones industrial average plunged more than 1,200 points, on a day when equity markets tumbled across the globe. It closed down 1,034 points, or 2.6%.

Technology stocks have been hit particularly hard lately: The Nasdaq composite was, for a moment on Monday, down more than 10% since the middle of last week, entering into what economists euphemistically call “correction” territory.

The sudden pullback has jolted investors and raised questions that go beyond financial markets to questions about the underlying health of the economy.

And even when things level out, the window-rattling downturn threatened to kill the political euphoria that has swept over Democrats since President Biden withdrew and Vice President Kamala Harris emerged as the party’s standard-bearer.

So what’s happened and what may be next? Here are first-draft-of-history answers to some of the crucial questions:

What’s causing the current plunge in U.S. stock markets?

Economists point to several factors behind the sell-off. To begin with, tech stocks were overdone, pushed beyond their underlying value by the artificial intelligence craze. Hence the Nasdaq correction. Nvidia, Apple and Intel were among big losers Monday.

And Friday’s jobs report, which showed a sharp slowdown in hiring and unemployment in July, set investors — even those not deep into tech — on edge. That came on the heels of news that jobless claims, a proxy for layoffs, increased significantly in the waning days of July.

It hasn’t helped that the Federal Reserve has been reluctant to start cutting interest rates, which have throttled inflation as intended, but also weighed down businesses and consumers.

Then there’s the reverberation from global markets. On Monday, Japan’s once-high-flying stocks took their worst drubbing since Black Monday in 1987. The huge losses were seen, in part, as being a reaction to market declines and growing concerns in the U.S.

“It’s an unfortunate sequence of events that causes selling, selling, selling,” said Christopher Rupkey, chief economist at Fwdbonds, a research house in New York.

How have stock markets in the U.S. performed overall this year?

Even with Monday’s panic-selling, stocks generally are up for the year, many way up.

Both the broader Standard & Poor’s 500 and Nasdaq are still more than 9% higher compared with the start of the year. The Dow is the laggard, up only 2.6% since Jan. 2.

Stocks have benefited from strong corporate earnings; investor excitement over AI’s growth and potential; and the expectation of Fed interest rate cuts, said Mark Zandi, chief economist at Moody’s Analytics.

“This is still, at this point, a garden-variety correction,” Zandi said of the current turmoil, though he added that the situation warrants careful watching. “Things can take on a life of their own.”

Should I be worried about a recession?

Not yet, maybe never.

The classical definition of a recession is two straight quarters of declining gross domestic product. The latest, second-quarter GDP, after adjusting for inflation, was a strong 2.8%.

Almost every economist agrees that you can’t have a recession without job growth turning negative for some extended period. And the U.S. economy hasn’t come close to that point.

Employers have added jobs every month since January 2021, when the economy began to recover from the pandemic. Most recently, in July, job growth came in below expectations, but at 114,000 new payroll hires, that was still solidly positive.

“I don’t see the underpinnings of an economic downturn,” said Jack Ablin, chief investment officer and founding partner at Cresset Capital.

Can anything be done to arrest the decline in stocks?

To quell the sell-off, some investors have urged the Fed to cut interest rates now, in a kind of emergency move ahead of the central bank’s next scheduled meeting in mid-September.

Fed officials have taken such steps before, during the pandemic and the Great Recession, for example. But analysts doubt that the policymakers will intervene unless markets keep faltering badly; making an emergency cut could make things worse by frightening people and causing a market meltdown.

“It’s certainly not a hair-on-fire moment,” Zandi said.

What are the risks going forward?

With more people on edge about the economy, further declines in the stock market could erode confidence among businesses and consumers, leading to a pullback in hiring and spending. That would be a psychological development, but economies are not immune to the fears or the hopes of their human components.

Consumer spending, which drives the U.S. economy, has held up very well in recent years, thanks to steady job and wage growth. But there are indications from companies such as McDonald’s and Starbucks that consumers are becoming more cautious.

Higher-income households account for a disproportionately big share of spending, which has been supported by rising gains in home and stock prices. A sharp drop in stocks would have the reverse impact, a so-called negative wealth effect, making richer households more averse to spending, which could lead to a recession.

Days after closing more than a dozen restaurants, Italian American restaurant chain Buca di Beppo has filed for Chapter 11 bankruptcy protection.

The company, known for serving big portions to large groups and its kitschy decor, said it intends to use the bankruptcy process to restructure its operations and keep 44 locations open, including restaurants in Pasadena, Universal City, Encino and Redondo Beach.

“This is a strategic step towards a strong future for Buca di Beppo,” Rich Saultz, the company’s president, said in a statement. “While the restaurant industry has faced significant challenges, this move is the best next step for our brand.”

William Snyder, chief restructuring officer, said the remaining restaurants were open for business and “we expect day-to-day operations to continue uninterrupted” during bankruptcy. Gift cards, reservations and promotions remain active and redeemable.

Buca di Beppo has been reducing its brick-and-mortar footprint for years, beset by many of the same issues faced by restaurant competitors: sluggish consumer spending, higher employee wages and increased food costs among them. The Orlando, Fla., company, which saw sales decrease 4.7% last year, peaked at 95 locations in 2013, according to Restaurant Business.

Last month, Buca di Beppo abruptly shut down 13 restaurants, about 20% of its portfolio, including a location in Sacramento. The privately held company, which was founded in Minneapolis in 1993, is opening one new location.

The closures in July and Monday’s filing mark the latest sign of distress for the restaurant industry.

In June, Rubio’s Coastal Grill closed 48 of its California restaurants, including 24 in the Los Angeles area. Days later, the Carlsbad, Calif., fast-casual restaurant chain filed for bankruptcy protection and said it was seeking a buyer. It continues to operate 86 restaurants in California, Arizona and Nevada.

“Like the restaurant industry overall, Rubio’s has been negatively affected over the past few years by diminishing in-store traffic attributable to work-from-home practices remaining in place, and by rising food and utility costs that, combined with significant increases to the minimum wage in California, put pressure on a number of its locations,” the company said in a statement.

And in May, Red Lobster filed for Chapter 11 bankruptcy protection after closing dozens of locations.

The seafood chain has foundered in recent years because of managerial missteps, the effects of a sale to a private equity firm a decade ago and, most recently, its inability to bounce back after pandemic lockdowns. Red Lobster said its remaining locations — about 580 in the U.S. and Canada, as well as franchise locations in a handful of other countries — would operate as usual during the bankruptcy process.

Late last year Chinese automaker BYD surpassed Tesla as the world’s biggest seller of electric vehicles.

But you won’t find its cars in the United States anytime soon. With the Chinese auto industry facing tariffs in the U.S. and the European Union, one of its most important markets is Southeast Asia.

Of the 31 passenger car brands represented last month at the sprawling Indonesia International Auto Show outside Jakarta, about a third were from China. The vast majority of those were electric vehicles.

Striding past fashion models and huge video displays, Safik Bahsein made his way to the BYD display, where he honed in on a BYD Dolphin, which promises 300 miles on a single charge and sells for the equivalent of $26,000.

It’s one of three EV models that BYD now sells in Indonesia, the world’s fourth most populous country — with more than 275 million people — and the largest car market in Southeast Asia. The company’s first shipment of 1,000 EVs arrived last month.

“It’s quite beautiful,” said Bahsein, 49, who works in shipping. “Compared with European cars, I think BYD has good prospects in the future.”

In his view, the quality of Chinese cars now matches those from Europe and Japan. He said he was considering buying one for his wife, though he still prefers his Tesla Model 3, which he had to have specially imported two years ago because there are no dealers in Indonesia.

The country’s car market has long been dominated by the Japanese brands Toyota, Daihatsu and Honda. But Chinese companies have been gaining ground, particularly in EVs, where Japanese automakers have lagged.

Chinese brands accounted for 43% of EV sales in the first half of 2024, according to the Assn. of Indonesia Automotive Industries.

But getting people to buy EVs has been especially challenging in Indonesia, where there are many cheaper alternatives and a dearth of charging stations. Only 17,121 EVs were sold last year — just 2% of all auto sales.

“Southeast Asia, specifically Thailand and Indonesia, is the beachhead, both as a market and a production base,” said Lei Xing, former chief editor of the China Automotive Review.

(Tatan Syuflana / Associated Press)

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The Indonesian government has created incentives for EV buyers and set a goal of 400,000 EV sales next year. But the international data analytics firm Fitch Solutions has suggested that a more realistic expectation is 56,000 by 2028.

For Goldie Liem, 24, who recently bought a Binguo EV from the Chinese carmaker Wuling, the biggest incentive was the license plate, which exempts Jakarta drivers from road restrictions meant to cut down on traffic.

That saves her time on her daily office commute, which can take up to two hours. She said she also saves on gas, and pays about $60 a year in taxes compared with $430 for her old Mazda.

“It gets me from A to B, that’s it,” she said. “I haven’t tried to take it out of town yet, because I’m not that brave, in terms of charging stations and all that.”

It would take much more to make her husband an EV convert. They couple had come to the auto show so he could check out gas-powered BMWs.

In China, the EV industry has flourished thanks to clean energy subsidies and access to comprehensive supply chains for battery technology and vehicle manufacturing. But intense domestic competition has prompted price cuts and led automakers to look overseas for growth.

Brazil, Belgium, the United Kingdom, Thailand and the Philippines are the biggest export markets this year, according to the China Passenger Car Assn. Indonesia is among the fastest growing.

Wuling, a Chinese EV brand, accounts for about 40% of EV sales in Indonesia. But electric cars still only make up about 2% of total car sales, hampered by insufficient charging infrastructure.

(Stephanie Yang / Los Angeles Times)

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“Southeast Asia, specifically Thailand and Indonesia, is the beachhead, both as a market and a production base,” said Lei Xing, an independent auto analyst and former chief editor of the China Automotive Review. “It’s not like you’re going into Europe and competing against the Volkswagens and the BMWs. Now with the EV opportunity, Chinese brands are jumping on that.”

BYD recently announced plans to build a $1.3-billion EV plant two hours from Jakarta that will begin operations in 2026, joining other Chinese brands Neta and Wuling to build electric cars in Indonesia.

It’s no coincidence that Indonesia also happens to be one of the world’s leading producers of nickel and other minerals needed in EV batteries.

China has already invested billions of dollars in Indonesian nickel mines in order to procure the strategic metal. Now Indonesia is trying to attract more Chinese funding to process its natural resources and build cars at home.

In an op-ed this year for China Daily, a state-run newspaper, a senior Indonesian transportation official declared his country’s EV industry “open for business.”

The official, Rachmat Kaimuddin, the deputy coordinating minister of transportation and infrastructure, also encouraged Chinese carmakers to take advantage of the “golden opportunity” of recently announced tax incentives for international car brands producing in Indonesia.

For brands like BYD, building more facilities in other countries is a critical part of global expansion, particularly as the U.S. and EU have threatened to implement harsher policies to keep cheap Chinese models from pushing out their own domestic manufacturers.

Leading Chinese automaker BYD delivered its first 1,000 EVs to Indonesian consumers this year, as it expands its manufacturing and sales in one of Southeast Asia’s biggest auto markets.

(Stephanie Yang / Los Angeles Times)

Last month, the EU announced tariffs of up to 37.6% on Chinese EVs. In the U.S., President Biden raised the existing 25% tariff on Chinese EVs to 100%.

BYD has also opened a plant in Thailand, and has announced investment plans for Turkey, Hungary and Mexico, which could help the automaker sidestep foreign import taxes in the U.S. and Europe on Chinese goods.

“These are very strategic locations,” said Xing, the auto analyst. “In order to be global, I think the U.S. and Europe are the last two frontiers.”

In the meantime, there is Southeast Asia. At the auto show, Ricky Aristin, 23, spent two hours browsing cars that could potentially replace his Honda Accord. The highlight was climbing into the driver’s seat of a BYD Seal, an electric sedan that sells for about $44,000.

“It feels like an expensive car,” Aristin said. “It’s a good experience from the car with the lowest price.”

Nonetheless, he decided he wouldn’t buy an EV until Jakarta has more charging stations.