Market Volatility Center

Updated March 31, 2020

The history of the financial markets can tell us one thing for certain: Volatility is a normal part of investing. We’re here to help you understand what that means and what you can do to stay on track for retirement. Explore the resources below to get started.

A few tenets to remember:

  • Consider staying invested instead of trying to time the market.
  • Keeping portfolios diversified can help soften negative impacts.
  • Before making investment changes, consider your risk tolerance and how long before you retire and need access to the funds.

Diversification does not ensure a profit or protect against loss.

Market Volatility Resources


Q: What are market volatility circuit breakers?

A: Market circuit breakers were put in place to maintain orderly trading of the stock exchanges during times of extreme volatility.  They are designed to slow trading down for a few minutes to provide investors the ability to understand what is happening in the market, consume the information and make decisions based on market conditions.  They also help prevent both speculative gains and extreme losses within a small time frame.  (When triggered, circuit breakers either stop trading for a small period of time or close trading completely. 

Under market rules, circuit breakers kick in at three thresholds:

Level 1:  A drop of 7% from the prior day’s closing price of the S&P 500® Index (used as a proxy for the overall stock market) triggers a 15-minute trading halt.  Trading is not halted if the drop occurs at or after 3:25 p.m. ET.

Level 2: A drop of 13% triggers another 15 minute halt.  Trading is not halted if the drop occurs at or after 3:25 p.m.

Level 3: A drop of 20% triggers a halt for the remainder of the trading day, and trading resumes the following day.

Q: Can I still make a change to my account when a circuit breaker is triggered?
  • Level 1 and Level 2 circuit breakers           
    You may continue to place mutual fund orders during the day even if Level 1 and Level 2 circuit breakers occur and the market is paused for 15 minutes.  Orders placed any time during the day before end-of-day market close will receive today’s fund closing price at the end of the day.  
  • Level 3 circuit breaker
    • If the Level 3 circuit breaker occurs, the market will close early for the remainder of the day (similar to days when the market closes early for holidays).
    • Mutual funds orders placed before the Level 3 early close will receive today’s closing mutual fund price and orders placed after the early close will receive tomorrow’s price (or the price on the next day the market is open).
    • For example, if the Level 3 circuit breaker occurs at 1 pm ET today, all mutual fund orders received before 1pm ET will receive today’s closing price and all orders received after 1pm ET will receive tomorrow’s closing price.

The S&P 500® Index is a registered trademark of Standard & Poor’s Financial Services LLC. It is an unmanaged index considered indicative of the domestic large-cap equity market and is used as a proxy for the stock market in general.

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