History of Notable Market Halts

This isn’t the first time that a market has been halted due to massive volatility.
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When the S&P 500 index dropped 7% shortly after the opening bell of trading Monday, March 9, circuit breakers triggered a 15-minute halt for U.S. stock markets. After trading resumed, the three major indexes — the S&P 500, the Dow Jones Industrial Average and the Nasdaq — all ended the day down more than 7%, their biggest one-day percentage decline since 2008. And then just a few days later, it halted again.

The halt has happened a few times in the past. Here are some of the more notable disruptions to the NYSE.

Notable Stock Market Halts and Closures Through History

1865

Going back 155 years, America saw the New York Stock Exchange shut down after the assassaination of Abraham Lincoln. The president’s death led to a weeklong break from trading.

September 20, 1873

A Philadelphia banking firm known as Jay Cooke & Company goes under after weak demand for its railroad bonds. The firm was one of the largest underwriters of treasuries, and caused a panic that spread through the market. The exchange was closed for 10 days as a result of the dire situation.

July 31, 1914

World War I breaks out, and the NYSE is halted for four months. The main cause for the closure is largely credited to foreign investment in domestic assets. When the European conflict took off, many of the countries had large amounts of U.S. securities, which could be sold off to create capital for war. The closure largely prevented the “run” on the market.

October 19, 1987

Though there was no halt on “Black Monday,” it is a day worth noting as it caused a 22% fallout in the market. This event brought more attention to the need for modern preventive measures that are aimed at avoiding massive sell-offs in a single day. The guidelines for market halts will be discussed later.

Oct. 17, 1997

So called “circuit breakers” caused the shutting down of the NYSE floor as well as the Nasdaq. These protections were implemented as a result of the 1987 crash. At the time, the setup was a 30-minute shutdown if the Dow decreased by 350 points. A second trigger with an additional 200-point loss would close the market for the day.

9/11 Attacks

The tragic events of September 11 caused the NYSE to not open that Tuesday morning. The Nasdaq also remained closed. The markets remained closed until September 17, as fears were prevalent that the quake of panic over the attacks would lead to massive sell-offs. When the NYSE did finally open, the market would lose 7.1%.

Dec. 1, 2008

This was the last time we saw the NYSE halted for big sell-offs. It is hard to forget the turmoil of the 2008 housing crisis that put the country into recession. Car companies were bailed out. Financial institutions were liquidated. Massive amounts of capital disappeared in days from the markets.

July 8, 2015

The NYSE was halted for a technical glitch that caused the exchange to be down for a few hours.

March 9, 2020 - What Caused It?

Monday morning’s halt and eventual reopening led to an all-day event of chaos. The fallout that led to the halt has been a slow burn over the past few weeks. It began with coronavirus fears, and what the spread of the virus could mean for the global economy. That has escalated into a much broader situation. A drastic 20+% pullback in oil prices, combined with declining interest rates on treasuries have compounded the issue over coronavirus concerns.

The Dow Jones Industrial Average finished 7.79% lower Monday. That’s a 2,014-point decline. The S&P 500 decreased a comparable 7.60%, finishing 225.81 points lower. Within a broader market sell-off, banks have been smacked over fears by investors that net interest margins could really get squeezed, thanks to what’s happening on the bond front. Transportation stocks and shipping stocks are suffering thanks to the virus concerns. Energy stocks are under serious heat due to the fallout in oil prices.

Where things go from here is a question that will be on everyone’s mind for the next few days. The coronavirus hasn’t gone away, and there’s real potential for continued problems. Low rates are likely to continue putting pressure on bank stocks, and transportation stocks seem a prime target to continue to suffer from travel fears over the coronavirus. Unless oil rebounds, energy stocks seem to have a great many headaches in their future.

Put frankly, we’re in uncharted waters.

March 12, 2020

Just three days after a market halt earlier in the week, trading was halted yet again.

Tensions from growing coronavirus concerns and sudden news about the spread - the WHO announcing a pandemic, the NBA suspending its season, President Trump's speech and travel ban from Europe - panicked investors, and not long after the opening bell the New York Stock Exchange halted trading on the S&P 500 for 15 minutes after stocks fell 7%. The Dow and Nasdaq Composite were halted as well. Wall Street futures, meanwhile, hit "limit down" levels.

What are the Modern Qualifications for a Market Halt?

The NYSE operates on a set of qualifications that must be met in order for a trading halt to occur. A level 1 trigger requires a 7% decline of the S&P 500. In the event that this requirement is met, the New York Stock Exchange will be halted for 15 minutes. This is what we saw Monday, when trading lasted for just four minutes in the morning before reaching that 7% loss.

After trading is resumed, the S&P 500 has to increase its decline to 13% in order to trigger a second halt. This halt once again lasts for 15 minutes.

Once trading is resumed for the second time, a level 3 trigger requires the market to reach a 20% decline. Once that happens, trading is halted for the third and final time. It does not continue for the rest of the day.