Market jitters may trigger Market Circuit Breakers as S&P Futures hit 'Limit Down' conditions as futures sank 5% on Sunday
With U.S. stock futures set to plunge at the open, investors will be watching for key market circuit breakers to kick in and limit or halt the market altogether, reports CNBC.
Futures hit “limit down” on Sunday evening after S&P futures sank 5%, halting trading below that level and preventing futures from falling any further.
What is ‘limit down’?
According to the New York Stock Exchange, a market trading halt may occur at “three circuit breaker thresholds” on the S&P 500 due to large declines and volatility. The exchange classifies this at three levels based on the preceding session’s close in the S&P 500.
The rules, which apply to regular trading hours only, are as follows:
Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes. (This would occur today if the S&P falls 208 points).
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 the drop happens after that. (This would occur today if the S&P falls 386 points).
Level 3: If the S&P 500 falls 20%, trading would halt for the remainder of the day. (This would occur if the S&P falls 594 points).