The U.S. stock market is experiencing a major two-day drop following President Trump’s announcement of new tariffs. The S&P 500 fell 4.8% on Thursday and continued falling over 5% on Friday, reaching as low as 5,101.75. However, it would need to fall further to 5,018.76 (a 7% drop) to trigger a “circuit breaker.”
Circuit breakers are automatic pauses in trading that kick in during steep market declines. They were created after the 1987 market crash to prevent panic selling. There are three levels: a 7% drop pauses trading for 15 minutes, a 13% drop does the same, and a 20% drop stops trading for the entire day. These emergency measures were last used in March 2020 during the early COVID-19 pandemic. Currently, other major market indexes are also falling significantly, with the Dow Jones down 4% and the Nasdaq down 4.6%.