The computer-driven event that caused a rapid U.S. market plunge and rebound on May 6, 2010, was the Flash Crash.
During the afternoon of May 6, major U.S. equity indexes fell extremely quickly before recovering much of the loss. The Dow Jones Industrial Average briefly dropped about 1,000 points, then regained hundreds of points within minutes. Individual securities also traded at bizarre prices, including some shares briefly changing hands for a penny.
Investigations by U.S. regulators concluded that a large automated sell order, combined with stressed market conditions and high-frequency trading, helped produce a severe liquidity imbalance. Trading rules and market structures allowed prices to move faster than human participants could assess.
The event led to reforms including single-stock circuit breakers and the broader Limit Up-Limit Down mechanism. It differed from a traditional crash because the most dramatic losses were brief and partially reversed the same day. A later U.S. Justice Department case identified trader Navinder Singh Sarao as a participant in manipulative spoofing, but the episode involved wider market-system factors.