The 2010 Flash Crash was the event in which U.S. stock indexes plunged and recovered within minutes after automated trading amplified a sell-off.
On May 6, 2010, the Dow Jones Industrial Average fell about 1,000 points, or roughly 9 percent, during the afternoon before recovering much of the loss. Prices in individual stocks and exchange-traded funds became highly dislocated, and some trades were executed at extremely low or high prices.
Investigations found that a large automated sell order interacted with existing high-frequency trading activity and reduced market liquidity. The exact mechanics were complex, but the episode demonstrated how electronic markets could transmit pressure at extraordinary speed.
The crash was not a normal multi-day bear market. It was a brief market-structure shock. U.S. regulators responded with measures including circuit breakers and rules intended to reduce the impact of clearly erroneous trades and sudden, destabilizing price movements.