The Dow dropped 1,000 points in 10 minutes — and nobody knew why

On May 6, 2010, the Dow Jones Industrial Average dropped approximately 1,000 points (about 9%) in a matter of minutes, then recovered most of the loss within 20 minutes. It was the largest intraday point decline in the Dow's history at the time, and no one could immediately explain why.

The SEC and CFTC investigation found that the crash was triggered by a large sell order in E-mini S&P 500 futures, which interacted with high-frequency trading algorithms to create a feedback loop of selling. The algorithms, designed to respond to market signals, amplified the decline by rapidly selling and withdrawing liquidity.

In 2015, British trader Navinder Sarao was arrested and charged with contributing to the crash through 'spoofing' — placing large sell orders he intended to cancel before execution, creating a false impression of supply. Sarao pleaded guilty and was sentenced to one year of home confinement. The case exposed the fragility of markets dominated by algorithmic trading and the danger of a system where liquidity can vanish in seconds.