Black Monday, the 1987 stock-market crash, prompted the United States to introduce market-wide trading halts known as circuit breakers.
On October 19, 1987, the Dow Jones Industrial Average fell 22.6 percent. The speed and scale of the decline exposed weaknesses in market infrastructure and raised concerns that automated trading and portfolio-insurance strategies could intensify selling.
In response, U.S. exchanges developed rules that temporarily halt trading after specified declines. Modern circuit breakers are linked to percentage movements in the S&P 500 and can pause trading for defined periods or close the market for the day at the most severe thresholds.
Circuit breakers do not prevent losses or guarantee orderly prices. Their purpose is to create time for investors and market systems to absorb information. They are distinct from ordinary single-stock trading halts, which affect only one security.