The New York Stock Exchange halted trading five minutes into the session today, as stocks plummeted down more than 7% immediately following the opening. It took five minutes for the trading to reach a point of 1,927.03 points down, at 23,937.75.
The circuit breakers are designed to halt trading for a short period of time and allow traders to assess the situation, preventing any false selloff from occurring due to panic or electronic device failures.
The first of the breakers (level one) trips when the index drops 7% in a day, provided it happens prior to 3:25 PM. Trading is stopped for 15 minutes, then allowed to resume.
A second breaker (level two) exists for 13%, which is again set for actions prior to 3:25 and will halt trading for 15 minutes. That level has not been reached.
The level three breaker trips if the index drops 20% at any time during the trading day. At that point, trading will stop for the day.
UPDATE: The market has retreated from the lows of the day, following the resumption of trading. It is, after the first hour of trading, down only about 1,400 points.
UPDATE: The market ended the day down 2,013.76 points from Friday’s close, at 23,851.02. It was the largest single point drop in the market’s history, but as a percentage it did not break the top 10. This is due to the disproportionately high percentage numbers which occurred in the 1930s, when the drop of a few points would be reflected as a high proportional number. Today’s drop of 7.79% is the fourth largest percentage drop since 1933.