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Why stock market is down today and will a Nasdaq circuit breaker be placed | Explained
The US stock market had a choppy first hour on Thursday with Dow Jones falling as much as 2,150 points, the S&P 500 and the Nasdaq down between 6.5% to 7%.
The US stock market had a choppy first hour on Thursday with Dow Jones falling as much as 2,150 points, the S&P 500 and the Nasdaq down between 6.5% to 7%. This comes after the Bureau of Labor Statistics released the consumer price inflation report, stating that inflation eased more than expected in March.
As almost all major stocks plummeted, several investors wondered if a circuit breaker would be placed on the Nasdaq. A circuit breaker is triggered when the S&P 500 index declines by a certain percentage within a single trading session. The three stages are: Level 1 (7% decline), Level 2 (13% decline), and Level 3 (20% decline). Trading halts for 15 minutes if the drop occurs before 3:25 PM ET for Levels 1 and 2, and for the remainder of the day if it's a Level 3 drop at any time.
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As of 9:56 AM PDT (12:56 PM ET), we are still early in the trading session, which runs from 9:30 AM ET to 4:00 PM ET. The Dow Jones is down 5.15%, while the S&P 500 has dropped 5.75%. The Nasdaq Composite slid 1,131.9 points, or 6.61%.
A Level 1 circuit breaker is triggered if the S&P 500 falls 7% from the prior day's close. If the index does have a 7% decline, trading could be halted for 15 minutes.
Will a circuit breaker be triggered?
Yes, it is likely, that the S&P 500 will reach or exceed a 7% decline. For Levels 2 (13%) and 3 (20%), the current decline (up to 7%) is still far from those thresholds.
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When was the last time a circuit breaker was triggered?
The last time a market-wide circuit breaker was triggered was on March 18, 2020. This occurred during the intense volatility sparked by the onset of the COVID-19 pandemic. The S&P 500 dropped more than 7% shortly after the market opened, activating a Level 1 circuit breaker, which halted trading for 15 minutes.
Why stock market is down today
After huge gains following President Trump's tariff pause announcement on Wednesday, stock indexes plummeted on Thursday. This might be a reaction to the White House's clarification about tariffs on China, which are at 145%. Retail inflation eased in March but that may not do much for the Fed to cut rates in May.
