What is a circuit breaker in the stock market?
An automatic pause in trading when the S&P 500 falls 7, 13 or 20 percent in a day. It gives everyone a few minutes to breathe rather than selling into a panic.
A circuit breaker is a rule that halts all US stock trading for a short time when the market falls too far, too fast. The triggers are based on the S&P 500: a 7 percent drop pauses trading for 15 minutes, a 13 percent drop pauses it again for 15 minutes, and a 20 percent drop ends trading for the day.
The idea came out of the 1987 crash, when prices fell 22 percent in a single session with no pause. Regulators concluded that a forced break lets people read the news, check their orders and think, instead of selling reflexively because everyone else is. The pause does not stop the decline; it slows the panic.
They are rare. The market-wide breaker tripped four times in March 2020 during the pandemic sell-off, and before that essentially never since the current rules were set. There are also single-stock halts, which are more common: a stock that moves too far in a few minutes gets paused briefly, and stocks are routinely halted ahead of major news.
If you are ever holding through one, the sensible action is the one the rule is designed to enable: do nothing for fifteen minutes.
Informational only, not financial advice. Updated September 4, 2026.
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