The May 6, 2010 event when U.S. stocks briefly plunged and recovered rapidly was called the Flash Crash.
During the afternoon of May 6, major U.S. indexes fell extremely quickly. The Dow Jones Industrial Average dropped about 1,000 points, or roughly 9%, before recovering much of the loss within minutes. Some individual securities traded at wildly low or high prices, revealing weaknesses in electronic-market safeguards.
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission later concluded that a large automated sell order in E-mini S&P 500 futures interacted with high-frequency trading and fragmented markets. Their report attributed the extraordinary movement to a feedback loop of selling and reduced liquidity, rather than to a single piece of economic news.
The crash led to new controls, including trading pauses for individual stocks and broader market circuit breakers. It also showed that computer-driven markets can move faster than human traders can evaluate events. The Flash Crash was temporary, unlike the prolonged declines of 1929 or 2000.