According to People's Daily, on March 18, the U.S. stock market, bond market and commodity market fell at the same time. The S&P 500 index (S&P 500) fell 7% during the session, triggering the circuit breaker mechanism again, and market trading was suspended for 15 minutes. This is the fourth circuit breaker in 10 days.
The Dow Jones Industrial Average fell 1,660 points, or 7.8%, to 19,576 at midday. The Nasdaq Composite fell 6.3%. All three major indexes are down about 30% from their mid-February highs.
Meanwhile, oil prices plunged 15% to their lowest level in more than 18 years.
It is said that the Trump administration is considering an increase of $1 trillion in spending, while the Federal Reserve has once again cut interest rates to zero to stabilize financial markets. But for now, it seems that market panic is continuing.
The decline of the three major stock indexes when the U.S. stock market had a circuit breaker
Previously, the U.S. stock market had a circuit breaker on October 27, 1997, when the Dow Jones Industrial Index plummeted 7.18%.
On March 9, March 12, and March 16, the U.S. stock market crashed three times. In these three days, the declines of and the Dow Jones Index reached 7.8%, 10.0%, and 12.9% respectively, each time falling harder than the last. Even "Stock God" Warren Buffett said, "I have lived for 89 years and have never seen such a scene."
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According to CCTV news, as of the early morning of the 19th, Beijing time, the Dow Jones Industrial Average fell to 19,567 points. On January 20, 2017, the day Trump was sworn in, the Dow Jones Industrial Average closed at 19,827 points. This means that all gains in the Dow Jones Industrial Average since Trump took office have been wiped out.
The so-called circuit breaker mechanism refers to the threshold at which an exchange stops or closes market trading due to extreme declines. These levels are determined based on the closing price of the S&P 500 index the previous day. The New York Stock Exchange , Nasdaq and other stock exchanges introduced this "circuit breaker" mechanism after the stock market crash in October 1987. Since then, the circuit breaker mechanism has been modified many times. The current standard is: if the S&P 500 index falls by 7% or more between 9:30 am and 3:25 pm Eastern Time, the "first-level" suspension will be triggered; if the index falls by 13%, the "second-level" suspension will be triggered, which also lasts for 15 minutes. Afterwards, if the drop reaches 20%, trading will stop for the day.
Earlier, the US stock market actually triggered a circuit breaker only once. On October 27, 1997, the Dow Jones Industrial Index plummeted 7.18% to close at 7161.15 points, the largest decline since 1915.
At that time, the US stock market used the Dow Jones Industrial Average as the circuit breaker benchmark index. On May 31, 2012, New York Stock Exchange modified the index circuit breaker mechanism . The modifications mainly include the following aspects: First, the S&P 500 Index replaced the Dow Jones Industrial Index and was set as the circuit breaker benchmark index; second, the circuit breaker threshold was modified to 7%, 13% and 20%. The new circuit breaker mechanism was implemented on February 4, 2013.
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