What event caused the U.S. stock market's 2010 Flash Crash to begin at about 2:32 p.m.?
Answer
A large sell order
A large sell order helped cause the U.S. stock market’s 2010 Flash Crash to begin at about 2:32 p.m.
On May 6, 2010, major U.S. indexes suddenly plunged before recovering much of the decline within minutes. A joint investigation by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission concluded that a large automated sell order in E-mini S&P 500 futures helped trigger the episode.
The order interacted with high-frequency trading and already fragile market conditions. Liquidity disappeared in parts of the market, and automated systems intensified the rapid movement. The Dow Jones Industrial Average fell about 1,000 points intraday, then recovered much of that loss.
The crash showed that modern markets can move extremely quickly without a single conventional news announcement. It also led to reforms including circuit breakers and clearer procedures for reviewing clearly erroneous trades.