What event caused a sudden, severe U.S. market plunge on May 6, 2010?

The Flash Crash caused a sudden, severe U.S. market plunge on May 6, 2010.

During the afternoon session, major U.S. equity indexes fell rapidly and then recovered much of the loss within minutes. The Dow Jones Industrial Average temporarily dropped nearly 1,000 points, an unusually large move for such a short period. Prices in individual shares and exchange-traded products also became highly distorted.

A joint investigation by U.S. regulators concluded that a large automated sell order in E-mini S&P 500 futures interacted with high-frequency trading and other automated strategies. The combination reduced market liquidity and accelerated the fall. The event showed how modern electronic markets could amplify a single order under stressed conditions.

The Flash Crash was not a conventional, multi-month economic collapse like 1929 or 2008. It was a brief market-dislocation event. Its legacy included new circuit breakers, trading safeguards, and closer attention to algorithmic trading and fragmented exchanges.