S&P 500's 7% drop would trigger risk of trading halt in the US market**

On Thursday, participants in the US stock market are paying particular attention to the trigger levels of the so-called automatic trading halt mechanism, also known as circuit breakers. Against the backdrop of a 3.8% drop in the S&P 500, investors are watching how much deeper the sell-off could get and whether it could lead to a temporary halt in trading.

Under the rules governing the US stock market, if the S&P 500 falls 7% from the previous day's closing level, trading will be halted for 15 minutes. This rule applies if the threshold is reached before 3:25 PM Eastern Time. Based on current-day calculations, the first halt level corresponds to 7,150.41 points on the index.

In the event of a sharper decline, two additional levels come into play. A 13% drop in the S&P 500, which would bring the index down to 6,689.09 points, will also trigger a 15-minute trading pause, provided this threshold is reached before 3:25 PM.

The third and most severe level is tied to a 20% decline in the index. In this case, if the S&P 500 falls to 6,150.89 points, trading will be halted for the remainder of the trading session — regardless of what time of day the market reaches that level.

It's worth noting that this mechanism is based on the S&P 500 and not on the Nasdaq 100 or the Dow Jones Industrial Average. That said, a trading halt applies broadly across the US equity market.

Since the S&P 500 has already fallen 3.8%, investors' main focus right now is on the 7% decline threshold. However, if a decline corresponding to the first or second level occurs at or after 3:25 PM Eastern Time, trading will not be halted. The only exception is the third level — a 20% drop — which will trigger a trading halt regardless of the time.