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New concerns about a slowing of central bank easing, this time emanating from Asia and Europe, ignited a broad selloff on Wall Street Tuesday.
According to preliminary calculations, the Dow Jones Industrial Average dipped 117 points, or 0.76%, to 15122, the S&P 500 skidded 16.7 points, or 1%, to 1626 and the Nasdaq Composite retreated 36.8 points, or 1.1%, to 3437.
For Wall Street, central bank news often trumps all other headlines. Such was the case on the day as traders received concerning signals from the Bank of Japan and the European Central Bank.
The BOJ has pledged to push hard to push inflation up to 2%. Thus far, the policy has sent the country's benchmark stock-market index surging close to 30% for the year, and sparked a collapse in the yen that could help the struggling economy. However, shares there sold off sharply after the BOJ said it would hold policy steady for the moment despite recent volatility in long-term Japanese government bonds.
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Meanwhile, the German Constitutional Court begins its two-day hearing on whether the European Central Bank's purchasing of sovereign bonds during the eurozone debt crisis is legal. ECB President Mario Draghi's pledge to do whatever it takes to keep borrowing costs from spiking has been a method the central bank has used to get the crisis under control.
"While no ruling is expected this week, the Constitutional Court hearing over the next couple of days is another reminder that the ECB continues to tread a fine line between signaling to markets that its firepower is unlimited (hence the backstop credible), while being required to work within the constraints of the legal/institutional framework," economists at Nomura wrote to clients.
Still, Jan Hatzius, Goldman Sachs' (GS) chief U.S. economist told the investment bank's clients Monday that the Federal Reserve, seen as the world's most powerful central bank, is likely to continue its bond-buying operation through December. He also noted that the recent "good news is bad news" theme on Wall Street is overdone, and that the U.S. economy "isn't doing that well" yet.
Also on the economic front, there is a report due at 10:00 a.m. ET on wholesale inventories. The gauge is forecast to have ticked up 0.2% in April from February.
Elsewhere, commodities were sharply lower. The benchmark U.S. crude oil contract tumbled $1.21, or 1.3%, to $94.56 a barrel. Wholesale New York Harbor gasoline dropped 1.3% to $2.81 a gallon. In metals, gold dipped $11.20, or 0.81%, to $1,374 a troy ounce.
In corporate news, Dole (DOLE) CEO David Murdock offered to buy the rest of the company he doesn't already own for $12 a share in cash. Shares surged on the news.
The Euro Stoxx 50 sold off by 2.1% o 2664, the English FTSE 100 dropped 1.7% to 6292 and the German DAX tumbled 1.7% to 8165.
In Asia, the Japanese Nikkei 225 sunk 1.5% to 13318 and the Chinese Hang Seng skidded 1.2% to 21355.