What automatic trading safeguard halted U.S. stock trading after the March 9, 2020 plunge?

A circuit breaker halted U.S. stock trading after the March 9, 2020 plunge.

The S&P 500 fell more than 7 percent shortly after trading began on March 9, 2020, triggering a Level 1 market-wide circuit breaker. Trading was paused for 15 minutes, giving investors time to absorb information and allowing markets to stabilize before reopening.

The plunge was linked to escalating fears about the economic effects of COVID-19 and a simultaneous oil-price shock involving Saudi Arabia and Russia. Additional U.S. circuit breakers were triggered on March 12, March 16, and March 18.

Circuit breakers are designed to slow panic-driven selling, not to guarantee that prices will recover. U.S. rules use thresholds based on the previous day’s S&P 500 close: 7 percent and 13 percent trigger 15-minute pauses, while a 20 percent fall closes the market for the day.