Markets fall, economic recovery could be “slow and bumpy”

Markets fell on Thursday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 fell 0.2 percent.

A report from IHS Markit on Thursday showed that its flash manufacturing PMI for the US rose to 39.8 in May from 36.1 in April while the flash services PMI rose to 36.9 from 26.7.

IHS Markit's flash composite PMI for the euro zone rose to 30.5 in May from 13.6 in April.

While the PMI data indicated some improvement in the economy, strategists at Cantor Fitzgerald wrote in a note that “markets are priced to perfection on the expectation that there is only smooth sailing” and warned that should COVID-19 cases re-emerge, “the path back to growth will be slow and bumpy”.

Still, Savita Subramanian, Bank of America's head of US equity and quantitative strategy, suggested that low equity allocation among investors and bond yields near zero “can be the catalyst for the rotation into stocks, driving the market higher”.