Wall Street futures hit ‘limit down’ levels for the second time this week as global stocks plunged to fresh one-year lows amid accelerating coronavirus fears after President Donald Trump issued a sweeping European travel and and the World Health Organization declared a global pandemic.
A weak start to trading, fueled by disappointment with the lack of progress from the Trump administration’s pledge for “major” tax relief to support the economy, was exaggerated by Trump’s decision to ban travel between the U.S. and Europe for at least 30 days, a move that sent European shares to a near four-year low and pulled U.S. futures sharply lower.
Following the 5% session decline for S&P 500 futures, which fell 137.53 points by 5:17 am Eastern time, the contracts will not be allowed to fall below that level until the start of cash trading at 9:30 am Eastern time.
Futures contracts tied to the Dow Jones Industrial Average, meanwhlie, slumped 1,191.22 points and those linked to the Nasdaq 400.62 points.
Active trading in the main SPDR S&P 500 ETF (SPY) – Get Report, however, continues, with the market’s biggest passive investment vehicle slumping 4.8% to change hands at $261.11 each. The SPDR Dow Jones Industrial Average ETF (DIA) – Get Report, meanwhile, was last seen 6.5% lower at $242.04 each.
During the regular trading session, trading will halted by exchange regulators for 15 minutes if stocks fall by at least 7%,
The first ‘circuit’ would halt trading for 15 minutes if the S&P 500 were to trade at 2549.30 points or lower. If markets extend the decline to 13% down on the session, trading would be suspended for another 15 minutes. A 20% decline, however, would shut down trading for the remainder of the day.
The NYSE triggered circuit breakers on Monday, as well, using the “limit down” rules during the official trading day for the first time since 2008.
The CBOE’s key volatility gauge, known as the VIX, was marked 32% higher at 62.48, meaning options traders are pricing in a 62.5% chance that the S&P 500 will rise or fall by 62.5% over the next year.
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