Circuit Breakers Triggered Again With Stocks in Bear Market

Market-wide circuit breakers that already tripped once this week were triggered again as selling in the S&P 500 dragged stocks into an intraday bear market.

The benchmark for American equities plunged 7% to 2,549 as of 9:35 a.m. in New York, the level where NYSE rules stipulate a 15-minute trading halt aimed at soothing frayed nerves. That leaves the index 25% below its all-time high and on course to meet the accepted definition of a bear market.

“Circuit breakers won’t help sentiment,” said Dennis Debusschere, head of portfolio strategy at Evercore ISI. “What will help is policy and comfort the virus is contained.”

After cash trading resumes, another 15-minute pause would happen if stock losses reach 13%, a drop that would put the S&P 500 at 2,385. If the decline hits 20%, or 2,193.10, markets will close for the day. Only the 20% rule applies in the final 35 minutes of cash trading. Traders have never seen a 13% or 20% breaker trip.

The battering on the stock market Thursday continues one of the most volatile periods since the financial crisis, as investors grapple with rising likelihood for a virus-fomented recession and an all-out oil price war. President Donald Trump’s remarks on the coronavirus were the catalyst for the latest leg down in risk assets. A combination of travel restrictions between the U.S. and Europe and underwhelming stimulus measures did little to reassure investors over efforts to handle the worsening outbreak.

The circuit breakers tripped four minutes into Monday’s session, temporarily steadying markets that ultimately endured the worst rout since 2008.

“There’s a reason why they have those circuit breakers — it’s to give people time to come back from panicked feelings,” said Chris Zaccarelli, the chief investment officer at Independent Advisor Alliance. “It’s always a good idea to give people time to digest the move and apply some logic.”

Read more: How circuit breakers calm market panic: QuickTake

Volatility has reigned in markets around the world amid an outbreak that has infected about 120,000 people. At least 10 billion shares have traded on U.S. exchanges each day for two weeks, and the VIX — dubbed Wall Street’s “fear gauge” — topped 50 on Wednesday and has closed above 30 for eleven days straight.

Trading limits that govern the overnight futures sessions tripped twice this week, once on the downside after the oil battle broke out and once Tuesday when investors speculated Trump administration stimulus was imminent.

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