The Flash Crash was the market event in which U.S. stocks plunged nearly 1,000 Dow Jones Industrial Average points within minutes on May 6, 2010. The Dow temporarily lost about 9% of its value before recovering much of the decline.
The episode began during an already nervous trading session influenced by concerns about the European sovereign-debt crisis. A large automated sell order, combined with high-frequency trading and fragmented electronic markets, contributed to an extreme shortage of liquidity.
Some individual securities briefly traded at bizarre prices, while many trades were later canceled under exchange rules. The event demonstrated that computer-driven markets could move far faster than human traders could interpret or manage.
Investigations by U.S. regulators concluded that a large automated sale of E-mini S&P 500 futures helped initiate the turmoil, while high-frequency traders amplified the movement. The crash led to new safeguards, including market-wide circuit breakers and mechanisms for handling clearly erroneous trades.