Stock Markets Halted for Third Time Since Corona Scare
For the third time in the past two weeks, the Dow has hit its emergency circuit break bringing the stock market to a halt. This is not a physical power outrage, but relating to a notable trading curve which occurs due to massive volatility.
Every stock market globally has tanked since the coronavirus has intensified across the globe, with nervous investors eager to shed stock, with the average fall of 6%.
Whilst President Trump had hoped and predicted the ‘biggest stock market rise in history’ this Monday morning, the market did the absolute opposite.
The weekend had seen announcements of cities and states across the US encouraging self-quarantine and shutting non-essential businesses and places prone to gathering including bars, restaurants and entertainment venues.
Cryptocurrencies is another market that is not immune to the disease, with prices of bitcoin down to $4,644.53 compared to one month ago, when it was hovering around $10,000.
The over-activity of the stock market has called the so-called circuit breakers to trip for the third time in just a few days – with a trip on March 9, March 12 and then again on March 16.
For a Level 1 pause to be triggered, the S&P 500 has to see a 7% drop from the previous trading day’s close. A Level 2 stop is activated at a 13% drop and a Level 3 at 20%. Level 1 and 2 triggers shut down the market for a minimum of 15 minutes; a Level 3 circuit breaker suspends activity on the NYSE (and major U.S. exchanges) for the remainder of the trading day.
In some markets, many trading platforms are coming under fire, however, these are purely middlemen between investors, stockbrokers and the markets and their most of their systems are running as per usual.
Circuit breaker trips are more common on individual stocks (where similar rules apply), but market-wide trading halts are very uncommon. Three trips are considered unheard of in the history of the U.S. markets, barring the only exception to the 9/11 terrorist attacks, in which the New York Stock Exchange and other markets were closed for roughly a week.