How did speculative investing weaken the stability of the stock market?

Prior to new regulations about margin in the early 2000's, day traders were able to leverage their accounts and continuously buy and sell positions all day long. A small day trader could be trading millions of dollars in stocks each day, destabilizing the market.
The "day trading rule" was invented to ensure that a trader could do no more than 4x their account value and keep a minimum. Of $25k in their account at all a times.