Several others have discussed some other relevant effects, which I agree with:
- fear produces more violent market movement than greed
- stocks have a natural minimum, but no natural maximum
I don't think anybody has mentioned another reason: stock markets are _naturally_ "long" rather than neutral. When companies issue public offerings (e.g. an IPO), they create shares of stock from "thin air"--that is, there is a buyer who ends up long (owns stock), but nobody ends up short. However, once stocks start trading on the secondary markets, every buyer is paired with a seller. So always, the sum of all long positions exceeds the sum of all short positions. On average, everybody is happy when the stock market goes up, and everybody is sad when the stock market goes down. So it makes sense to place a speed bump on the downside only.
Compare this to derivatives (futures, options) where there are no "public offerings", and every single trade is a buyer and seller paired. There is a net balance of long and short positions at all times. Consequently, many derivatives have limits in both directions. Note that some derivatives have no limits (whoa scary), and many equity index derivatives carry over the one-sided limit. S&P 500 futures, I believe, have two-sided limits outside of core US market hours, but only a downside limit once the stock market opens.
I don't think anybody has mentioned another reason: stock markets are _naturally_ "long" rather than neutral. When companies issue public offerings (e.g. an IPO), they create shares of stock from "thin air"--that is, there is a buyer who ends up long (owns stock), but nobody ends up short. However, once stocks start trading on the secondary markets, every buyer is paired with a seller. So always, the sum of all long positions exceeds the sum of all short positions. On average, everybody is happy when the stock market goes up, and everybody is sad when the stock market goes down. So it makes sense to place a speed bump on the downside only.
Compare this to derivatives (futures, options) where there are no "public offerings", and every single trade is a buyer and seller paired. There is a net balance of long and short positions at all times. Consequently, many derivatives have limits in both directions. Note that some derivatives have no limits (whoa scary), and many equity index derivatives carry over the one-sided limit. S&P 500 futures, I believe, have two-sided limits outside of core US market hours, but only a downside limit once the stock market opens.