The S&P 500 fell as much as 3.8% on Thursday, a sharp reversal that put the market's emergency trading-halt thresholds in focus less than a day after President Donald Trump celebrated record highs on Wall Street.
The decline prompted traders to monitor circuit-breaker levels, which can temporarily shut down trading across U.S. stock exchanges when losses become severe. The S&P 500 would need to fall another 3.2 percentage points from its decline to trigger the first emergency halt.
A celebration followed by a selloff
On Wednesday, Trump pointed to the stock market as evidence of his administration's economic success. "Stock Market just hit another Record High—91 Days in just a short period of time—Less than two years. Your 401(k)s are through the roof," he wrote on Truth Social, closing with "Record Setting All! President DONALD J. TRUMP."
Wall Street had rallied Wednesday following sweeping Democratic midterm election victories. The S&P 500 gained 1.6%, its strongest daily performance in three months, while the Dow Jones Industrial Average jumped more than 1,500 points to 53,361 points.
Thursday's losses erased that rally in a single session, with technology stocks taking the biggest hit.
How close is Wall Street to a circuit breaker?
The U.S. stock market has three emergency thresholds designed to slow panic selling. The mechanisms automatically suspend trading when the S&P 500 falls by a specified percentage from its previous closing price.
- The first threshold is a 7% decline, corresponding to an S&P 500 level of 7,150.41 points for Thursday's session. Reaching that level before 3:25 p.m. ET would trigger a 15-minute halt across U.S. equity markets.
- A 13% decline, or 6,689.09 points, would trigger another 15-minute suspension.
- The most severe threshold is 20%, or 6,150.89 points, which would shut down trading for the remainder of the day.
Under New York Stock Exchange rules, the first two circuit breakers stop applying at 3:25 p.m. ET, while the 20% threshold remains active throughout the session. The rules apply to the entire U.S. equity market, not just stocks included in the S&P 500, so a market-wide halt would also suspend trading in companies listed on the Nasdaq and other U.S. exchanges.
AI and chip stocks lead the decline
The technology sector was particularly hard hit as investors digested the consequences of Tuesday's election results. At around 11 a.m. ET, the Nasdaq Composite had fallen nearly 5%, while the S&P 500 was down 3.2%.
Nvidia lost more than 6%, while the broader semiconductor index plunged nearly 11%. Companies involved in building AI infrastructure were also under pressure as investors worried that Democratic victories could bring stricter oversight of data-center construction.
"We suspect there is going to be some scrutiny on this aggressive AI buildout," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told Reuters.
The selloff also spilled into cryptocurrencies. Bitcoin fell below $76,000, wiping out its post-election recovery as approximately $428 million in leveraged crypto long positions were liquidated within an hour.
Stocks also faced pressure from persistent inflation concerns and uncertainty over the Federal Reserve's next interest-rate decision. Investors are awaiting Friday's October employment report, which could provide further clues about the direction of monetary policy.
Despite Thursday's sharp losses, the S&P 500 had not reached its first market-wide circuit breaker at the time of this report.
