What event caused the 2010 Flash Crash, when U.S. stocks plunged and rebounded within minutes?

A large sell order helped cause the 2010 Flash Crash, when U.S. stocks plunged and rebounded within minutes. On 6 May 2010, the Dow Jones Industrial Average fell about 1,000 points, or roughly 9%, before recovering much of the loss. The event exposed how automated trading could magnify a temporary imbalance.

The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission later concluded that a large automated sell order in E-mini S&P 500 futures interacted with high-frequency trading and fragmented markets. Liquidity providers first absorbed orders, but some automated systems then reduced or withdrew their bids. Prices became extremely unstable, and some securities briefly traded at implausible values.

The event was not simply caused by one trader pressing a button in isolation. Market structure, algorithms, order-book liquidity, and feedback effects all mattered. In response, regulators introduced or strengthened safeguards, including single-stock circuit breakers and later market-wide mechanisms. It is also distinct from a conventional multi-day crash: the defining feature was the extraordinary speed of the fall and rebound.