The 2010 event that caused a sudden plunge and rapid partial recovery in U.S. stocks was the Flash Crash.
On May 6, 2010, major U.S. stock indexes fell rapidly before recovering much of the loss within minutes. The Dow Jones Industrial Average briefly dropped nearly 1,000 points, one of its largest intraday point declines at that time.
Investigations found that automated trading, extreme market conditions, and a large sell order contributed to the episode. A later U.S. investigation identified trader Navinder Singh Sarao’s spoofing activity as one contributing factor, but the event also exposed weaknesses in market structure and safeguards.
The Flash Crash is different from a conventional bear market because its defining feature was speed. It did not represent a long, sustained collapse like 2008 or the dot-com crash. Circuit breakers and other trading controls were subsequently strengthened.