For the second time in a week — and for just the second time since the 2007-08 financial crisis — trading was brought to a 15-minute halt. This comes after a 7% drop in the S&P 500 triggered so-called “circuit breaker” rules designed to give the stock market some breathing room.
What happened overnight to cause such sharp declines? It seems that in under an hour, a whole host of headlines rocked the market, sending futures into a spiral. And yes, the coronavirus from China is at the heart of all this panic. As cases continue to spread around the United States and the death count rises in Italy, people are calling for a massive response.
The markets got that response, but it certainly didn’t help the already struggling indices. Joining the S&P 500 deep in the red is the Dow Jones Industrial Average. The latter index is down almost 2,000 points.
Travel Bans Spark a Massive Selloff
First, President Donald Trump seemed to ban all travel from Europe to the U.S. But what does this mean? After his Oval Office announcement, he began to walk back the news. U.S. citizens who undergo health screening will still be allowed in. The travel ban only currently applies to foreign nationals attempting to enter the country.
Perhaps even more worrying to investors were headlines about major events. The NBA cancelled its season and the National Collegiate Athletic Association said no spectators will be allowed at its March Madness tournament games. This certainly is a disappointment to fans. But investors are reading into the cancellations, gathering that the voluntary loss of revenue spells big trouble.
The stock market hasn’t had time to digest this week’s news or to meaningfully rebound. Remember, Monday saw a similar trading halt right after the markets opened. The coronavirus and a Saudi Arabia-driven oil price war sparked that drop. And just like Monday, it’s important to note that a 13% drop would trigger a second halt. A drop of 20% would end trading for today.
Sarah Smith is a Web Editor for InvestorPlace.com. As of this writing, she held none of the aforementioned securities.