The nickname of the dramatic U.S. market plunge on May 6, 2010, was the Flash Crash.
During the afternoon, the Dow Jones Industrial Average suddenly lost about 1,000 points, or roughly 9 percent, within minutes before recovering much of the decline. Individual stocks and exchange-traded products showed unusually extreme prices, revealing weaknesses in market structure and automated trading.
Investigations found that a large automated sell order interacted with high-frequency trading and reduced market liquidity. The exact event involved complex order flows across markets rather than a single traditional panic. Regulators later charged trader Navinder Singh Sarao with contributing to the disruption through spoofing-related activity, although the episode also exposed broader structural vulnerabilities.
The Flash Crash differed from a conventional bear market because it was exceptionally rapid and much of the fall reversed the same day. U.S. exchanges and regulators subsequently introduced safeguards, including circuit breakers and coordinated procedures for handling clearly erroneous trades.