MarketView for June 11

Summary

Wall Street endured a usually volatile session on Tuesday after Japan's central bank disappointed equity markets by holding its monetary policy steady. The Bank of Japan in April announced a $1.4 trillion stimulus program, and while it left open the possibility of more action if borrowing costs spike, the lack of additional measures to curb recent volatility in the bond market rattled trading.

Major indexes fell more than 1 percent after the open but shaved most of the losses by midday, only for the selling to resume towards the session's end. However, overall volume was average.

Financial and energy sectors led the way down on the S&P 500. The 10 major sectors of the index closed the day lower but defensives including consumer staples and healthcare fared better.

The decision by the Bank of Japan roiled various markets as trades built around central bank support of major economies have begun to unwind in the past weeks. Benchmark Treasury yields briefly approached 2.3 percent, the highest in 14 months, and equities dropped globally, while the yen posted its strongest day against the dollar in more than 2 years.

Wall Street has become more nervous of late over when the Federal Reserve may slow its accommodative measures, which have been a pillar of the S&P 500's gain of 14 percent so far this year. The S&P 500's steady climb so far this year has gotten bumpier since comments from Fed Chairman Ben Bernanke last month sparked uncertainty over the Fed's timeline for slowing its $85 billion a month bond purchases.

Among individual companies, shares of Lululemon fell 17.5 percent to $67.85 after the company's chief executive said she will step down once a replacement is found.

Dole Food rose 22.2 percent to $12.46 after the company received an unsolicited buyout offer from its chief executive.

Catamaran ended the day up 11 percent to $53.99 as at least six brokerages raised their price targets on the Canadian company after it signed a 10-year agreement with health insurer Cigna.

SoftBank said it agreed with Sprint to raise its offer for the wireless carrier to $21.6 billion from $20.1 billion. Sprint ended the day up 2.4 percent at $7.35.

Volume was roughly in line with the 6.38 billion shares that changed hands on the three major equity exchanges so far this year.

For the seventh time in the past ten sessions, the Dow moved at least 100 points, up or down, from the previous day. The cause of the volatility is hard to pin down since it is almost equally split between rallies and sell-offs, as well as domestic and foreign worries or hopes.

Today's early jitters appear to be pegged to the fact that the uber-easy Bank of Japan held pat and did not see the need to be even looser with their devaluation efforts. Fortunately, better-than-expected Small Business Confidence has tempered the disappointment, forcing investors once again to make a buy or sell decision on a twitchy market.

Wholesale Inventories Rise Modestly

According to a report released on Tuesday by the Commerce Department on Tuesday, wholesale inventories were a bit higher in April, indicating that restocking will not be much of a boost to economic growth in the second quarter. According to the Department, wholesale inventories increased 0.2 percent after a 0.3 percent rise in March. The rise in April was in line with expectations.

Inventories are a key component of gross domestic product changes. Excluding autos, inventories were flat. This component goes into the calculation of GDP. Coming on the heels of data last week showing factory inventories rose 0.2 percent in April, the data suggested that restocking probably would not contribute much to growth this quarter.

Inventories added more than half a percentage point to first-quarter GDP growth, which advanced at a 2.4 percent annual rate. Estimates for growth in the April-June period currently range below a 2.0 percent pace.