Traders watch S&P 500 circuit-breaker levels as selloff deepens

U.S. stock market traders are watching key circuit-breaker levels Thursday as the S&P 500 tumbled 3.8%, raising the possibility of a broader market disruption if the selloff accelerates.

Under U.S. market-wide circuit-breaker rules, a decline of 7% in the S&P 500 from its previous closing level triggers a 15-minute trading halt if reached before 3:25 p.m. ET. Based on today’s thresholds, that level stands at 7,150.41.

A 13% decline, corresponding to an S&P 500 level of 6,689.09, would trigger another 15-minute halt before 3:25 p.m. A decline of 20%, or a level of 6,150.89, would result in trading being halted for the remainder of the session, regardless of the time.

The rules are based on the S&P 500, rather than the Nasdaq 100 or Dow Jones Industrial Average, and apply across U.S. equity markets.

With the S&P 500 already down 3.8%, traders are monitoring the 7% threshold as the next major line in the sand. However, a Level 1 or Level 2 decline reached at or after 3:25 p.m. ET would not trigger a trading halt, unless the market reaches Level 3.