The Dow Jones Industrial Average briefly lost nearly 1,000 points during the Flash Crash on May 6, 2010.
The sharp decline unfolded within minutes during an otherwise ordinary trading day. Major U.S. stock indexes plunged, and some securities traded at extraordinarily low prices before recovering much of the loss. The Dow’s fall was about 9% from the day’s earlier level, although the market finished well above its intraday low.
Investigations found that automated trading, high-frequency firms, market fragmentation, and a large sell order interacted in a way that drained liquidity. A later U.S. investigation charged trader Navinder Singh Sarao with contributing to the event through spoofing, although the episode reflected a complicated market-system interaction rather than one simple cause.
The Flash Crash differed from a conventional bear market because its most dramatic movement happened in minutes. Regulators later introduced measures including single-stock circuit breakers and marketwide trading pauses to reduce the chance of similar disorder.