On Monday morning, trading on all major stock market indices was temporarily halted for 15 minutes after the S&P 500 fell more than 7% and the Dow Jones Industrial Average lost nearly 2,000 points — the worst day for the two major indices since December 2008.
Stock market trade halts can be for single securities or entire indices, and usually only occur for a few reasons. The anticipation of news (good or bad), a steep market correction (whether a flash crash or a swift, prolonged drop) or other concerns impacting trading are typical reasons why trading halts occur.
Today’s plummet triggered market “circuit breakers” due to the S&P’s fall reaching the Level 1 threshold. The selloff came as fears regarding the coronavirus from China heightened on more news of outbreak.
Furthermore, oil prices fell after the Organization of the Petroleum Exporting Countries (OPEC) failed to strike a deal between Russia and Saudi Arabia over the weekend. In turn, a price war has begun and crude oil prices have fallen the most since the Gulf War in January 1991.
Another circuit breaker could trigger a second 15-minute halt if the S&P were to fall 13% today, and trading could be halted for the rest of the day if stocks fall 20%. Currently, the indices have slightly recovered but are still materially lower. The S&P 500 is down 5.7%, while the Dow Jones Industrial Average sits 5.5% lower.