The purpose of the US stock fuse system is to avoid a vicious circle and a sharp decline in the market. When the stock market fluctuates violently, investors often have panic, which in turn leads to intensified selling behavior and further market decline. In order to avoid this situation, the exchange introduced the fuse mechanism.
According to the rules of the US stock market fuse system, when the S&P 500 index falls by 7%, the exchange will stop trading for 15 minutes to ease market sentiment. If the decline continues to expand to 13%, the transaction will stop again 15 minutes. If the decline reaches 20%, the transaction will stop for a whole day.
Let's take a look at the history of the US stock market crash.
The first crash of U.S. stocks occurred in June 1987+ 10/9, also known as "Black Monday". At that time, the S&P 500 index plunged 22.6% in one day, setting a record for the largest one-day decline in history. Due to the drastic fluctuation of the market, the exchange decided to close the market on the same day to prevent further decline.
1997, the Asian financial crisis broke out, which triggered violent fluctuations in the international financial market. During this period, US stocks have also experienced many blows. 199710/On October 27th, the S&P 500 index fell by 7.2% and the exchange was suspended for 15 minutes. In the same year1October 28th 10, the S&P 500 index fell again by 6.9%, and the exchange stopped trading again 15 minutes. These two fuses have successfully eased market sentiment.
During the global financial crisis in 2008, the American stock market experienced a series of fuses again. On June 24th, 2008 10, the S&P 500 index fell by 8.8%, and the exchange stopped trading for about one hour. In the same year1October 27th 10, the S&P 500 index fell by 8.9% again, and the exchange stopped trading again. These fuse measures have effectively prevented the market from falling further.
On August 24th, 20 15, China stock market plunged, which triggered global stock market turmoil. At that time, the S&P 500 index fell by 5% shortly after the opening, and the exchange immediately announced that it was blown and stopped trading 15 minutes. The fuse did not have the expected effect, and the market sentiment was still very bad. The exchange finally decided to close for the day.
The last US stock market crash occurred on March 9, 2020, when the global stock market fell sharply due to the economic uncertainty caused by the COVID-19 epidemic. The S&P 500 index fell by 7% shortly after the opening, and the exchange immediately announced that it was blown and stopped trading 15 minutes. The fuse did not stop the market from falling, and the Standard & Poor's 500 Index finally fell 12%.
Through these historical records, we can see that the fuse system of US stocks played an important role when the market fluctuated violently. It can alleviate market sentiment, prevent the occurrence of vicious circle, and protect the interests of investors and market stability. The fuse can't solve the fundamental problem, it's just an emergency measure. You still need to be cautious when investing and make wise decisions according to market conditions.