The S&P 500 SPX, 0.45% was down 5.9% in the final hour of trade Thursday, and if losses steepen in the final hour of trade, circuit breakers, intended to dampen volatility, can no longer prevent a horrific one-day implosion. So-called circuit breakers kick in when the S&P 500 falls by at least 7% in regular trade, causing a broad-market, 15-minute halt in trade in the regular session. However, that mechanism is shut off at 3:25 p.m. Eastern. Halts are somewhat controversial on Wall Street, with some market participants saying they don't help price discovery. A 13% drop in the S&P 500, after its initial 7% slide, would result in another 15-minute pause, while a 20% drop in the S&P 500 would trigger what's known as a level three cirucit breaker, which would stop trading for the remainder of the day. Thursday's decline was being attributed to concerns about rising cases of the novel strain of coronavirus and a gloomy outlook of the U.S. economy offered by the Federal Reserve at the conclusion of its policy-setting meeting on Wednesday. The Dow Jones Industrial Average DJIA, 0.25% was off 1,850 points, or 6.9%, at 25,129, while the Nasdaq Composite Index COMP, 0.03% was down 5.2% at 9,505.
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