Market plunges in worst drop since 1987 crash

By Kellie Mejdrich

The stock market tumbled 10 percent on Thursday in its worst percentage drop since the 1987 crash, despite an attempt by President Donald Trump to calm the growing panic over the coronavirus pandemic.

The Dow Jones Industrial Average plunged more than 2,000 points, continuing a weekslong slide that has knocked the gauge down roughly 30 percent from its peak.

Selloffs continued until the close of trading, but frantic investors walked back from the brink after steep declines triggered a marketwide halt early in the morning.

Still, it was a blistering day for stocks — the worst since the infamous 1987 "Black Monday" event when shares fell more than 20 percent.

Regulators and politicians rushed to stop the bleeding with promises of economic stimulus. The Federal Reserve announced a series of massive cash injections, including the purchase of longer-term government bonds in a $1.5 trillion infusion over the next two days. But Congress' efforts to assemble an aid package foundered with partisan disputes preventing any action during trading hours.

Meanwhile, Trump, whose Oval Office address on Wednesday night helped spark the selloff, said the markets will bounce back quickly.

"It's taken a big hit but it's going to all bounce back and it's going to bounce back very big at the right time," Trump said during brief remarks to the press at the White House.

Pre-market trading had already shown signs of strain after Trump's nationwide address. After the president announced a travel cutoff between the U.S. and Europe, stock futures plunged. By the time markets opened at 9:30 a.m. Thursday, futures for all three major indices — the S&P 500, the Dow Jones Industrial Average and the Nasdaq composite index — had dropped 5 percent, hitting the maximum allowable selloff price before the market opens.

Just minutes after stocks opened for the morning, trading was closed down after shares fell 7 percent, resuming after 15 minutes. It was the second time the so-called circuit breaker kicked in this week and only the third time in history.

By noon, stocks began tumbling again, with the S&P 500 index down more than 8 percent. But stocks never dipped low enough to trigger another pause.

The index would have had to plunge by 13 percent before the second trigger would close trading for another 15 minutes. A final trigger could have closed markets early for the day under what are known as market-wide circuit breakers, which regulators have put in place to curb massive selloffs when investors panic.

On Monday, a break occurred within minutes of the market opening as coronavirus-related market fears collided with upheaval in the oil markets related to changes in Saudi Arabia's oil production.

Before that, the only time a market-wide break occurred was in 1997.

Today's circuit breaker rules, which went into effect in 2013, have three different thresholds to stop trading: if S&P 500 index drops by 7, 13, or 20 percent. If the market drops 7 or 13 percent before 3:25 p.m., trading will stop for 15 minutes. After 3:25 p.m., drops in those levels don’t halt market-wide trading. But a 20 percent market decline at any time of day halts trading for the rest of the day market-wide.