Although there is no specific threshold for stock market crashes, they are generally considered as abrupt double-digit percentage drop in a stock index over the course of a few days. Stock market crashes often make a significant impact on the economy. Selling shares after a sudden drop in prices and buying too many stocks on margin prior to one are two of the most common ways investors can to lose money when the market crashes.
Well-known U.S. stock market crashes include the market crash of 1929, which resulted from economic decline and panic selling and sparked the Great Depression, and Black Monday (1987), which was also largely caused by investor panic.
Another major crash occurred in 2008 in the housing and real estate market and resulted in what we now refer to as the Great Recession. High-frequency trading was determined to be a cause of the flash crash that occurred in May 2010 and wiped off trillions of dollars from stock prices.
In March 2020, stock markets around the world declined into bear market territory because of the emergence of a pandemic of the COVID-19 coronavirus.