Waves of selling in U.S. stock index futures triggered Chicago
Mercantile Exchange limits that prevent declines from surpassing 5% from
a closing reference price, as the spreading coronavirus rattled
investors and crude oil plunged.
The curb means the contract can’t trade at a lower price for the remainder of the overnight session, although transactions at or above the threshold are allowed.
“It allows cooler heads to prevail,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone. “Particularly in the overnight sessions it’s a good thing to have because you just don’t have as many products at work. This is one rule that it’s been so long since we have seen it, but it’s proved effective over time.”
Skipping over some technical details …
Equities have whipsawed all week in trading as volatile as any time on record as investors assess the threat to the global economy from the spreading coronavirus.
Nasdaq 100 futures will stop falling if the contract reaches 8,093.25, while the Dow contracts cannot trade below 24,534.