The Flash Crash describes the 6 May 2010 U.S. market event in which stocks plunged rapidly and then partly recovered.
On the afternoon of 6 May 2010, major U.S. stock indexes dropped sharply within minutes. The Dow Jones Industrial Average briefly fell by about 1,000 points, nearly 9%, before recovering much of the loss. Many individual securities experienced unusually extreme price movements, including trades at implausibly low or high prices.
Investigations found that automated trading played a central role. A large sell order in E-mini S&P 500 futures interacted with high-frequency trading and rapidly changing market liquidity. The exact chain of events was complex, and no single explanation captures every price movement.
The event led U.S. regulators and exchanges to improve circuit breakers, market surveillance and rules for clearly erroneous trades. It was different from a conventional crash driven by a long economic recession: the Flash Crash unfolded extraordinarily quickly and was followed by a partial intraday rebound. A later court case identified trader Navinder Singh Sarao as contributing to the event through spoofing-related activity.