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U.S. stocks fell today on data revealing an unexpected drop in retail sales in March, coupled with a decline in consumer sentiment. Gold declined into bear market territory today, dropping more than 4%, leading to predictions that 2013 might mark the end of gold's 12-year bull run. For the day, the Dow lost a fraction of a point, with 17 of its 30 components lower; the S&P 500 fell 4 points; and the Nasdaq was down 5. Decliners led advancers by three to two on both the NYSE and the Nasdaq. The prices of Treasuries declined. Gold futures fell $63.50 to close at $1,501.40 an ounce, while the crude oil fell $2.22 to settle at $91.29.

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Today we have a guest post by Venk Lal, director of global equity, investment risk management, for the EverKey Global Equity team at Wells Capital Management. In an article written on April 4, Venk shared his thoughts about Japan’s recent equity market outperformance as well as the Bank of Japan’s announced monetary policy changes, and whether this signals the next stage in promoting a cycle of Japanese reflation.

Quantitative and qualitative monetary easing announced early this morning by Haruhiko Kuroda, the Bank of Japan’s (BOJ) governor, heralded another stage in the ongoing efforts to reflate Japan’s economy, the dollar/yen currency, and local capital markets.

While the rise of Japan’s equity market over the past quarter begs the question of whether recent outperformance represents only an ephemeral cyclical wave of market euphoria following Prime Minister Shinzō Abe’s landslide December election or whether it has the makings of a longer-lasting and self-fulfilling structural phenomenon, the announced comprehensive changes to monetary policy provide further impetus for Abe-nomics’ reflationary policy agenda.

The BOJ announced transformative changes to its monetary policy framework, positively surprising market expectations with the scale of action, the unanimity of internal support, the timing of its decision (preceding its April 26 meeting), and the well-orchestrated strategy for communication with market participants. Actions spanned a number of areas:

Trading volume was light today ahead of Thursday’s market holiday, and U.S. stocks finished on two-week highs on news that a cease-fire between Israel and Hamas had been reached. However, lenders failed to reach an agreement to release emergency aid to Greece, which limited market gains. The S&P 500 Index rose for a fourth consecutive day, and Boeing and United Technologies were top advancers. In addition, salesforce.com, the largest maker of online customer-management software, rose 8.8% after reporting that sales and profit forecasts were in line with projections.

The Dow gained 48 points, the Nasdaq edged higher by 9, and the S&P 500 rose by 3 points. Twenty-four of the Dow’s 30 components gained ground. On the New York Stock Exchange, advancing issues outnumbered decliners for the day by nearly two to one. The prices of Treasuries strengthened, and the price of gold futures increased 0.26% to $1,728.20 an ounce. The price of crude oil on the New York Mercantile Exchange rose 0.72% to $87.38 a barrel.

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Concerns about Europe helped drag down the S&P 500 for a fourth-straight day as the index recorded its biggest drop in more than a month. The markets reacted after European Central Bank President Mario Draghi revealed no immediate actions to stabilize the eurozone debt crisis. Draghi had previously raised expectations last week when he pledged to "do whatever it takes" to save the euro. Markets in Europe also finished sharply lower following the ECB meeting. Other market news included Bristol-Myers Squibb Co. (BMY), whose shares fell more than 8.5% after an executive was accused of insider trading and trials of an experimental hepatitis C drug were suspended.

For the day, the Dow lost 92 points, with 26 of its 30 components lower; the S&P 500 fell 10 points; and the Nasdaq was down 10 points. Decliners led advancers by five to three on the NYSE and by four to three on the Nasdaq. The prices of Treasuries were higher. Gold futures fell $16.60 to close at $1,590.70 an ounce, while crude oil fell $1.78 to settle at $87.13 a barrel.

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