The S&P 500 plunged 9% just after the market opened Monday, triggering an automatic trading stoppage for the third time in a week.
Rate Cut Doesn't Bring Calm
The market was reacting to the Federal Reserve's emergency interest rate cut over the weekend — its biggest cut since the 2008 recession — that put interest rates near zero, and an increasingly dramatic reaction in the United States and Europe to the spread of the COVID-19 virus that is stifling commerce across the globe.
The central bank cut rates to 0% to 0.25% at an emergency meeting, and said it would purchase another $700 billion worth of Treasury bonds and mortgage-backed securities.
European markets had also been battered earlier Monday as the most recent economic figures from China showed factory data dropping more sharply than any time in the last three decades.
When Do Trading Halts Occur?
Market rules automatically stop trading when certain big market decreases happen, a measure meant to pause trading to prevent a panic-driven crash. When the S&P 500 drops 7%, a 15-minute Level 1 halt is triggered. Trading also would halt for 15 minutes if the market drop reaches 13%, a Level 2 circuit breaker. If the market were to continue to drop and reach a 20% decline, a Level 3 circuit breaker would kick in, and trading on NYSE group exchanges would halt for the day.
Shortly after 10 a.m. ET on Monday, the Dow Jones Industrial Average was down more than 10% to 20,828.21 points. The S&P 500 was down just over 10% to 2,439.19 points.