A 13% drop in the S&P 500 triggers a Level 2 market-wide circuit breaker.
The U.S. market-wide circuit-breaker system uses three decline thresholds measured from the S&P 500’s previous closing value: 7% for Level 1, 13% for Level 2, and 20% for Level 3. The thresholds are recalculated into points for each trading day.
Level 2 is designed to pause trading during an exceptionally severe one-day decline, giving exchanges, investors, and market participants time to assess conditions. Under the current framework, a Level 1 or Level 2 halt generally lasts 15 minutes when triggered during the applicable daytime window; a Level 3 decline closes the market for the remainder of the session.
The system changed after the 2010 Flash Crash. Regulators replaced older 10%, 20%, and 30% thresholds, which were based on the Dow Jones Industrial Average, with the current 7%, 13%, and 20% levels based on the broader S&P 500. These market-wide breakers differ from individual-stock trading pauses under the limit-up-limit-down system.