The S&P 500 plunged as much as 3.8% on Thursday, thrusting Wall Street's emergency trading-halt mechanisms into focus barely 24 hours after President Donald Trump celebrated the market's record highs.

A further decline to 7,150.41 points would trigger the first market-wide circuit breaker, temporarily halting trading across U.S. stock exchanges for 15 minutes. AI and semiconductor stocks led the selloff as investors reassessed what the Democratic Party's midterm victories could mean for the technology sector.

Trump's record-high celebration ages quickly

The timing was particularly awkward for Trump, who has repeatedly pointed to stock market performance as evidence of his administration's economic success. Less than 24 hours after boasting that Americans' retirement accounts were going "through the roof," the benchmark index suffered a steep drop that brought emergency trading halts into the conversation.

"Stock Market just hit another Record High—91 Days in just a short period of time—Less than two years. Your 401(k)s are through the roof," Trump wrote Wednesday on his Truth Social account, closing the message with "Record Setting All! President DONALD J. TRUMP."

Wall Street had rallied Wednesday following the Democratic Party's sweeping midterm election victories. The S&P 500 gained 1.6%, its strongest daily performance in three months, while the Dow Jones Industrial Average jumped more than 1,500 points to 53,361. Thursday's losses erased that entire rally in a single session, with technology stocks taking the biggest hit.

Decrypt's prediction market, meanwhile, is tracking SPY lows in November, with contracts covering potential lows from 700 to 740, as attention turns to where the index could settle this month.

How close is Wall Street to a circuit breaker?

The selloff prompted traders to monitor the market's circuit-breaker thresholds, which can temporarily shut down trading across U.S. stock exchanges when losses become too severe. The U.S. stock market has three such emergency tiers designed to slow panic selling: circuit breakers automatically suspend trading when the S&P 500 falls by a specified percentage from its previous closing price. The halts are meant to give investors time to make informed decisions during a plunge rather than to prevent declines outright.

The framework traces back to the October 1987 crash, when the Dow Jones Industrial Average lost nearly 23% in a single session, and it has been activated only rarely in the decades since: once in October 1997, and three times in March 2020 as the COVID-19 pandemic roiled markets—each of those 2020 halts coming on the same first-tier 7% threshold now back in focus.

The first threshold is a 7% decline, corresponding to an S&P 500 level of 7,150.41 points for Thursday's session. Reaching that level before 3:25 p.m. ET would trigger a 15-minute halt across U.S. equity markets. From its deepest point on Thursday, the index needed to fall a further 3.2 percentage points to set off the first emergency halt.

A 13% decline, or 6,689.09 points, would trigger another 15-minute suspension. The most severe threshold comes at 20%, or 6,150.89 points, and would shut trading down for the remainder of the day.

Under the New York Stock Exchange's rules, the first two circuit breakers stop applying at 3:25 p.m. ET, while the 20% threshold remains active throughout the session. The rules cover the entire U.S. equity market, not just stocks included in the S&P 500—a market-wide halt would also suspend trading in companies listed on the Nasdaq and other U.S. exchanges.

AI stocks lead the selloff

Technology was hit hardest as investors continued digesting the consequences of Tuesday's election results. At around 11 a.m. ET, the Nasdaq Composite had fallen nearly 5%, while the S&P 500 was down 3.2%.

Nvidia lost more than 6%, and the broader semiconductor index plunged nearly 11%. Companies involved in building AI infrastructure also came under pressure as investors worried that Democratic victories could bring stricter oversight of data-center construction.

"We suspect there is going to be some scrutiny on this aggressive AI buildout," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told Reuters.

The selloff also spilled into cryptocurrencies. Bitcoin fell below $76,000, wiping out its post-election recovery, after approximately $428 million in leveraged crypto long positions were liquidated within an hour, as Decrypt reported earlier today.

Stocks additionally faced pressure from persistent inflation concerns and uncertainty over the Federal Reserve's next interest-rate decision. Investors are awaiting Friday's October employment report, which could provide further clues about the direction of monetary policy.

Despite the sharp losses, the S&P 500 had not reached its first market-wide circuit breaker at the time of this report.