“Circuit breakers” were implemented after 1987’s Black Monday market crash.
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00:00As stocks continue to spiral, the S&P 500 is coming closer and closer to triggering what are called circuit breakers.
00:07A circuit breaker is a type of safety mechanism that forces markets to halt trading if the S&P falls by a certain percentage during the trading day.
00:14If it falls by 7% or 13% during intraday trading, which are considered level 1 and level 2 circuit breakers, trading is halted for 15 minutes.
00:24However, if the index drops by 20% or more and triggers a level 3 circuit breaker, trading will be stopped for the remainder of the day.
00:31Circuit breakers were originally established in the wake of 1987's Black Monday crash and were designed to stop panic selling, which would continue to send stocks plummeting.
00:40The last time a stoppage was triggered was in March 2020 when trading was halted on four separate days at the start of the COVID-19 pandemic.
00:48That'll do it for your daily briefing.
00:49From New York City, I'm Kelsey Barberio with The Street.