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Stock trading in U.S. will pause if S&P 500 reaches 7 percent plunge

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(Bloomberg) — If U.S. stocks extend their losses, traders will get a moment to catch their breath.

The thousands of companies listed by the New York Stock Exchange and Nasdaq Stock Market will pause for 15 minutes if the Standard & Poor’s 500 Index plunges 7 percent before 3:25 p.m. New York time. The benchmark got close earlier, falling as much as 5.3 percent.

Market-wide circuit breakers were installed after the 1987 crash to prevent losses from snowballing. The levels that trigger a halt have varied over the years, with a rule change in 2013 lowering the threshold to 7 percent.

The S&P 500 pared its drop to 2.2 percent at 10:54 a.m. New York time on Monday, slumping to 1,927.28. It would take a retreat to 1,832.92 to initiate the automatic pause today, according to NYSE spokeswoman Sara Rich.

Another circuit breaker kicks in if the S&P 500 extends its losses to 13 percent before 3:25 p.m. If the plunge reaches 20 percent at any point during today’s session, the entire stock market will shut for the rest of the day.