By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply Tuesday after the Bank of Japan disappointed some investors by holding its policy steady and worries about Federal Reserve tapering continued to haunt the market.
"Today is going to be a truly global marketplace, because the Bank of Japan didn't have more to say about the volatility in their bond markets. And we have a choppy economic recovery and a big question mark about our monetary policy," said Art Hogan, market strategist at Lazard Capital Markets.
Along with Asian and European stocks, the dollar fell sharply against the Japanese yen (USDJPY) after the Bank of Japan decided to stay put on its policies, dashing some hopes that the central bank would extend the duration on its ultra-low interest rates to banks.
Global stocks were also rattled as a German constitutional court began to consider the legality of the European Central Bank's pledge last year to buy the government bonds of weaker euro-zone countries to prevent the single currency from breaking up.
Extending losses into a second session, the Dow Jones Industrial Average (DJI) fell as much as 152 points, and was lately down 83.59 points, or 0.5%, at 15,155, with J.P. Morgan Chase & Co. (>> JPMorgan Chase & Co.) pacing declines that included all but four of its 10 components.
The S&P 500 index (SPX) dropped 11.30 points, or 0.7%, to 1,631.51, with the financial sector hardest hit among its 10 major industry groups.
The Nasdaq Composite (RIXF) slid 23.12 points, or 0.7%, to 3,450.54.
For every stock rising, less than six fell on the New York Stock Exchange, where 158 million shares traded by 10:30 a.m. Eastern.
Composite volume approached 818 million.
Inventories at U.S. businesses climbed 0.2% in April to $504.8 billion, the Commerce Department reported Tuesday.
Separately, the Labor Department said job openings at U.S. workplaces fell to 3.76 million in April from 3.88 million in March.
Wall Street stocks finished Monday's session little changed after Standard & Poor's revised its U.S. credit-rating outlook to stable from negative. In choppy trading, the Dow finished down 9.53 points, or 0.06%, to 15,238.59, and the S&P 500 (SPX) dipped 0.57 point to 1,642.81.
Shares of Dole Food Co. (>> Dole Food Company, Inc.) jumped after David H. Murdock, the company's chairman and CEO, made a bid for the rest of Dole. Murdock controls almost 40% of Dole Food, and the $12-per-share cash offer represents an 18% premium to Dole Food's closing price on Monday of $10.20 per share.
Shares of Lululemon Athletica Inc.(>> Lululemon Athletica Inc) tumbled a day after the yoga-clothing retailer announced quarterly results and said its Chief Executive Christine Day will step down.
Shares of Sprint Nextel Corp. (US-S) rose after SoftBank Corp. said it will raise its offer for Sprint to $21.6 billion from $20.1 billion.
U.S. investors are keeping an eye on Germany on Tuesday, where the country's supreme court will be scrutinizing whether ECB President Mario Draghi was within his legal limits when he last year announced a new policy -- Outright Monetary Transactions -- under which the bank could buy bonds to keep a euro-zone government and the euro from collapse.
"The primary fear is that OMT could be capped to a certain amount and that would definitely hurt Draghi's words when he said: 'We will do whatever it takes [to save the euro]'," said Henrik Drusebjerg, senior strategist with Nordea Bank.
Gold also fell sharply, and other precious and base metals followed suit. Gold for August delivery (GCM3) dropped $13, or 0.9%, to $1,373.20 an ounce on the New York Mercantile Exchange.