Stocks plunged on Monday at the open, triggering a key market-wide “circuit breaker” designed to prevent the market from crashing due to concerns over the COVID-19 coronavirus pandemic.
The S&P 500 plunged about 8% right after the opening bell, tripping the level one circuit breaker that resulted in a trading halt for 15 minutes. The Dow Jones Industrial Average plummeted 2,250 points at the open. The market reopened at 9:46 a.m. ET.
Sell-off accelerated after the trading resumed with the Dow down 11.8%, or 2,733 points. The S&P 500 dropped 11%, and the Nasdaq Composite is down 11.7%. If the S&P 500 declines 13%, trading will again pause for 15 minutes if the drop occurs on or before 3:25 p.m. ET.
MacDailyNews Take: Volatility is to be expected. Plunging stocks triggering circuit breakers should not be a surprise. Those who remain clam have a higher probability of profiting than those who panic.
Be fearful when others are greedy. Be greedy when others are fearful. — Warren Buffett
The “circuit breaker” rules, which apply to normal trading hours only, are as follows:
• Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes.
• Level 2: If the S&P 500 declines 13%, trading will again pause for 15 minutes if the drop occurs on or before 3:25 p.m. ET. There will be no halt if the drop happens after that.
• Level 3: If the S&P 500 falls 20%, trading would halt for the remainder of the day.