The 2010 U.S. market collapse that erased nearly $1 trillion in minutes was called the Flash Crash.
On May 6, 2010, major U.S. stock indexes fell extremely rapidly and then recovered much of the decline. The Dow Jones Industrial Average dropped about 1,000 points, or roughly 9 percent, during the session. Many individual securities experienced extraordinary temporary price movements, including trades at implausibly low or high prices.
Investigations attributed the event to a combination of market conditions, automated trading, and a large sell order. The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission later concluded that a trader’s algorithmic sale of E-mini S&P 500 futures interacted with high-frequency trading activity and reduced market liquidity.
The Flash Crash was not a conventional multi-year bear market like the Wall Street Crash of 1929. It was a brief, violent market dislocation that exposed the speed and complexity of electronic trading. Regulators subsequently developed measures including single-stock trading pauses and market-wide circuit breakers.