Wall Street Shakes Again: Is History Repeating Itself?

The rapid decline in Wall Street has revived grim memories of trading halts across the markets, Similar
to what occurred in March 2020 during the peak of the COVID-19 pandemic,
when trading was suspended multiple times due to consecutive crashes.

On Friday, the S&P 500 index fell by as much as 5.97%,
nearing the critical 7% threshold triggers the so-called “circuit breakers.”
on the New York Stock Exchange and halts trading for 15 minutes.

Contents

Circuit Breakers

Rising Recession Fears

Broad-Based Selloff

Circuit Breakers Return to Tame Market Overreactions

Regulators designed these breakers to curb extreme market volatility
and protect markets from erroneous trades, especially in an era of high-frequency trading.

They were last triggered in mid-March 2020 when the pandemic
led to widespread economic shutdowns and a historic spike in unemployment.

Mark Hackett, Chief Market Strategist at Nationwide, stated:
“This type of intense selling and panic is reminiscent of the pandemic period.”
Although today’s uncertainty is much lower compared to the COVID era, he noted:
“Few see a reason to rush into buying, and some algorithmic traders are forced to sell at certain levels.”

Rising Recession Fears

According to current regulations, the percentage drop needed to activate the circuit
breakers expand from 7% to 20% after 3:25 p.m., remaining in effect until the market closes at 4:00 p.m.

U.S. markets had already dropped 10% over the two days following President Donald Trump’s
announcement of the most severe tariffs in a century
sparking fears of a global economic downturn.
The selloff accelerated Friday morning after China announced its intention to impose
similar trade barriers on American goods, escalating the trade war.

In recent weeks, the markets have experienced sharp volatility.
The VIX volatility index jumped to 45.56 on Friday, while the Nasdaq 100 Volatility Index climbed to 37.79 points.

A Broad-Based Selloff

Eric Diton, President of The Wealth Alliance, described the situation:
“There’s a random selloff across all sectors—even gold is being sold today.
The only thing holding up is bonds. The keyword right now is uncertainty.
Markets hate uncertainty, and we’re drowning in it. Even Trump doesn’t know what’s coming next—nobody does.”

If the S&P 500 drops by 7%, trading is halted for 15 minutes.
If losses reach 13%, a second 15-minute halt is triggered.
A 20% plunge would shut down the market for the rest of the trading day.

Friday’s selloff was so widespread that finding a haven was nearly impossible.
All 11 sectors of the S&P 500 ended in the red, with energy and financials leading the losses.

The most significant contributors to the decline were tech giants like Nvidia, Apple, Tesla,
and Berkshire Hathaway. Fewer than 20 stocks,
including Home Depot and Nike, ended the day in the green.

Wall Street Shakes Again: Is History Repeating Itself

Wall Street Shakes Again: Is History Repeating Itself?

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