What event caused the U.S. stock market’s 2010 Flash Crash?

The 2010 U.S. Flash Crash was triggered by a large automated sell order executed amid already stressed markets.

On May 6, 2010, U.S. markets suddenly plunged and then recovered much of the decline within minutes. The Dow Jones Industrial Average briefly lost nearly 1,000 points, one of its largest intraday point swings at that time. Many individual securities also traded at extreme prices.

A joint investigation by U.S. regulators concluded that a trader’s large automated sell order for E-mini S&P 500 futures interacted with high-frequency trading and reduced market liquidity. The selling circulated through futures and equities markets, accelerating the fall.

The event was not caused by one ordinary news announcement. It led exchanges and regulators to improve safeguards, including single-stock circuit breakers and market-wide mechanisms intended to slow disorderly trading.