As the coronavirus outbreak continues to spread across the globe, the stock market is poised for another day of massive sell-offs as more and more industries are affected.
Trading was halted on Monday after the S&P 500 dropped 7% in the first few minutes after the opening bell, and could be paused again if the sell off continues once trading resumes.
Trading was halted for futures on the S&P 500 overnight after it plunged 4.89%, and trading during the day on Monday could be suspended as well if the index continues its decline.
The measure for stopping trading, know as a circuit-breaker, has three levels. If the index drops 7%, trading would stop for 15 minutes. Once the trading resumes, if the index drops 13%, before 3:25 p.m., trading would stop for another 15 minutes. If the drop happens after that time, trading will not stop.
If the S&P 500 drops 20%, trading would stop for the rest of the day. Bloomberg News explains just how rare it would be for the market sell-off to continue so massively that it hits the second or third circuit breaker level, noting, “Traders have never seen a 13% or 20% breaker trip.”
As markets were set to open, it looked like it was going to be another brutal day for the market, with CNBC predicting a 1,300 point drop for the Dow Jones Industrial Average.
Part of the sell-off has been fueled by a massive drop in oil prices as Saudi Arabia and Russia have begun flooding the market which has led to fears of a price war.
The last time a circuit breaker was tripped on the market was in the midst of the 2008 financial crisis.
