The 2010 Flash Crash occurred on May 6, 2010, when U.S. stocks briefly plunged before recovering.
During the afternoon of May 6, major U.S. equity indexes fell extremely quickly. The Dow Jones Industrial Average dropped nearly 1,000 points, or about 9%, within minutes before recovering much of the loss. Some individual securities briefly traded at wildly low prices, illustrating how electronic markets can behave under extreme stress.
A joint investigation by U.S. regulators concluded that a large automated sell order in E-mini S&P 500 futures helped interact with existing high-frequency trading activity and drained market liquidity. The event was not caused by a single ordinary investor selling shares manually. Its exact mechanics involved complex interactions among algorithms, futures, equities, and liquidity providers.
The Flash Crash was different from a conventional bear market. It was exceptionally rapid and much of the decline reversed the same day. Regulators subsequently introduced or strengthened safeguards, including circuit breakers and trading pauses, to reduce the chance that a similar liquidity vacuum would spread across markets.