The 2010 Flash Crash saw U.S. stock indexes plunge and recover within minutes during automated trading.
On May 6, 2010, the Dow Jones Industrial Average dropped about 1,000 points, or roughly 9%, in a matter of minutes before recovering much of the loss. Some individual securities briefly traded at extremely low prices. The event demonstrated how quickly electronic markets could transmit selling pressure.
A joint investigation by U.S. regulators concluded that a large automated sale of E-mini S&P 500 futures contributed to the cascade. High-frequency traders and other algorithms then interacted with the order flow, reducing liquidity and amplifying price movements. The precise behavior varied across markets and products.
The Flash Crash was different from a conventional multiday bear market: much of the decline reversed on the same afternoon. It led to reforms including improved market-wide circuit breakers, rules for clearly erroneous trades, and tighter monitoring of automated activity.