What would it take for U.S. markets to shut down? A lot

  • By Shaina Mishkin,
  • Barron's
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The market is plunging as coronavirus fears slow the U.S. economy and shut down business across the country. But the New York Stock Exchange won’t shut down, according to its president and other experts.

“It is important for the markets to remain open, and for them to function in a fair and orderly manner, as they have been,” NYSE President Stacey Cunningham said in a Tweet Monday afternoon.

The comments are the latest official response to speculation that U.S. markets might close because of high volatility attributed to the coronavirus pandemic. “Markets should continue to function through times like this,” U.S. Securities and Exchange Commission Chairman Jay Claytontold CNBC on Monday.

On Friday, U.S. Treasury Secretary Steven Mnuchintold the news outlet, “We intend to keep the markets open — that’s a sign of confidence for people.”

So, what would it take for the market to shut down? The New York Stock Exchange did not respond to a request for comment. The Financial Industry Regulation Authority referred Barron’s to the SEC, while the SEC directed Barron’s to Clayton’s earlier statement.

But if the past is any indication, the markets will remain open as long as trading is able to take place. In the past, weather and holidays have accounted for the most typical closings, according to a list of historic NYSE closures.

Only occasionally has extreme weather or another event shuttered the market for more than a day. The market closed for two days in 2012 after Hurricane Sandy, and shut down from Sept. 11 through Sept. 14, 2001 following the terrorist attack on New York City. Previously, the NYSE was closed for a day because of the New York City blackout of 1977, and operated on a four-day trading week for several months in 1968 because of the so-called Paperwork Crisis. The exchange shuttered for several months, from July 31 through Nov. 27, 1914, pending the outbreak of World War I.

Historically, U.S. markets have been shut only for practical reasons, “rather than as means of trying to restore confidence,” John Higgins, chief markets economist at Capital Economics, said in a report. “Stock exchanges were not closed, for example, after the dot com bubble burst or in the global financial crisis.”

To be sure, the situation gripping U.S. and world markets is so unusual that history may not help predict when markets will stop dropping. According to the Wall Street Journal, the NYSE is preparing a contingency plan that would use backup electronic trading systems should the floor have to close, so there is little indication that the exchange would have cause to shut down.

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