Pre-market trading had already shown signs of strain in stock futures. By the time markets opened, futures for all three major indices — the S&P 500, the Dow Jones Industrial Average, and the Nasdaq composite index had dropped 5 percent, hitting the maximum allowable sell-off price for futures before the market opens.
SEC Chairman Jay Clayton tried to reassure investors, saying in an interview on CNBC on Monday morning that „markets should continue to function through times like this.“
„Things have been functioning well in our markets over the past two weeks of a very volatile time,“ Clayton said.
Still, markets are bracing for further drops as the coronavirus shows no sign of abating and the U.S. government’s response has come under criticism.
There are three possible breaks in trading, called market-wide circuit breakers, which regulators put in place in 2013 to ensure that declines in stocks are orderly.
If the S&P 500 index drops by 7 percent or 13 percent before 3:25 p.m., trading will stop for 15 minutes. After 3:25 p.m., declines in those levels don’t halt market-wide trading. But a 20 percent market decline at any time of day halts trading for the rest of the day market-wide.
There were two trading pauses last week, but before that the only time a market-wide break occurred was in 1997.
Source: politico.com
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