The big market news on Thursday was the plunge in Japanese stocks. The Nikkei 225 dived 7.3 percent, the most since the aftermath of the March 2011 earthquake and tsunami.
Other Asian markets fell as well, with the Hang Seng in particular falling 2.5 percent.
European stocks were also hit hard, the STOXX Europe 600 losing 2.1 percent on Thursday.
However, the selling pressure on Thursday dissipated during the US trading session. The S&P 500 fell just 0.3 percent after having fallen as much as 1.2 percent earlier in the day.
The fall in Japanese stocks was mostly attributed to rising government bond yields. The Bank of Japan responded by announcing on Thursday that it was injecting 2 trillion yen into the financial system to stem volatility.
Not helping markets was a weak manufacturing report from China on Thursday. HSBC's preliminary manufacturing PMI for China fell to 49.6 in May from 50.4 in April, putting it back into contraction territory.
Europe's economy also showed further contraction on Thursday, although there were signs of improvement. Markit's flash composite index based on purchasing managers surveys rose to 47.7 in May from 46.9 in April. The manufacturing index rose to 47.8 from 46.7 while the services index rose to 47.5 from 47.0.
In another sign of improvement in the eurozone economy, the European Commission reported on Thursday that its consumer confidence index for the region rose to -21.9 in May from -22.3 in April.
Elsewhere in Europe, the UK confirmed that it grew 0.3 percent in the first quarter. However, growth was mostly due to a rise in inventories, raising doubts about its sustainability.
At least US growth looks likely to have been sustained, based on data on Thursday. Initial claims for state unemployment benefits fell 23,000 to 340,000 last week. New single-family home sales rose 2.3 percent in April. Markit's preliminary manufacturing PMI for May continued to show expansion despite falling to 51.9 from 52.1 in April.
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