The May 6, 2010 Flash Crash caused a sudden U.S. stock-market plunge and rapid recovery.
During the afternoon of May 6, major U.S. indexes dropped about 9 percent within minutes before rebounding. Individual securities briefly traded at bizarre prices, including some stocks falling to a penny. High-frequency trading, automated order interactions, and a large sell order contributed to the disorderly sequence.
Investigations by U.S. regulators concluded that a trader’s algorithmic order in E-mini S&P 500 futures helped trigger the event, while automated systems amplified selling and withdrew liquidity. The crash exposed weaknesses in fragmented electronic markets. Authorities later introduced safeguards such as market-wide circuit breakers and controls on clearly erroneous trades. It differed from a traditional crash because most losses reversed within the same session.