It gets uglier for stocks if this safety net breaks

Mark Zuckerberg was doing his best to cheer up investors, but then Haruhiko Kuroda delivered his convincing impersonation of a wet blanket.

Facebook’s stock FB, -0.76% is still on track for a record close after an impressive earnings report, as our chart of the day shows.

But most stocks around the world are sliding, led by Japan’s benchmark NIK, -0.40%  diving 3.6%. Folks apparently just can’t wait until May to sell.

Bank of Japan boss Kuroda shocked markets by not launching more stimulus.

“It is hard not to feel sorry for the Bank of Japan,” said IG’s Chris Beauchamp in a note. “It has tried unconventional policy once this year, and it didn’t work. Now it has tried to be unconventionally conventional, sitting on its hands, and this hasn’t worked either.”

“In both cases, the market has decided to push the yen higher, causing the usual howls of anguish at Japanese exporters,” Beauchamp added.

The Japanese yen USDJPY, -0.05% — a key safety play — has jumped about 3%, trading around ¥108 to the dollar. U.S. stock futures ESM6, -0.64% moved sharply lower as the BOJ news hit, as shown in the chart below:

The key level to watch for the yen is its mid-April mark of 107.63 to the dollar, says today’s call, which comes from Société Générale’s Kit Juckes.

The haven currency already has neared that level in recent trading. Watch to see if the safety play breaks decisively through it.

Slicing through this safety net, so to speak, could mean trouble for riskier assets like stocks.

Key market gauges

Dow futures YMM6, -0.43%  have been trading more than 100 points lower, and European stocks SXXP, -2.37% have been showing sizable losses. Gold GCM6, +0.14%  has been gaining as a key dollar index DXY, +0.31% drops. Oil US:CLM6  hasn’t been making big moves, letting others take the spotlight for once.

The call

“USD/JPY 107.63, the April low, is the key psychological level to watch,” writes SocGen’s Juckes in a note.

He suggests the yen’s rally isn’t unstoppable. Yet at the same time, he’s not sure when investor flight to the safety play actually will stop.

“I really don’t think we’re going back to the pre-Abenomics world of ever-stronger yen, and I think we’ll see the other side of USD/JPY 115 in due course — but I’m not brave enough to shout ‘Sell Yen!’ from the rooftops just yet, either,” the strategist says.

“The BOJ inaction suggests a desire to ignore the market response to January’s move into negative rates, and wait and see the effects of the policy change. That’s not going to diminish the sense that the BOJ is almost out of ammunition,” he adds.

Other yen watchers see the currency strengthening much more, with Charles Stanley technical analyst Bill McNamara saying, “we could see a move back to around ¥105 in the near term.”

Read more: 5 charts that show the BOJ market carnage

And see: Great expectations made the BOJ meeting more important than the Fed’s

The chart

Facebook’s stock is on track to top its March record close around $116, based on its action in extended trading after the social network’s earnings report late Wednesday.

Analysts are fired up, especially after other tech giants whiffed with their latest results.

“Facebook’s results were extraordinary, even by the standards of a company that seems to beat sky-high expectations time after time,” said ETX Capital’s Mark Priest in emailed comments.

Zuck & Co. have put to rest concerns about Facebook’s transition to mobile ads, and the divergence from ailing rival Twitter TWTR, -3.08% is “getting more marked,” Priest adds. Investors are likely reassured the CEO “shows no signs of wanting to let go of the reins,” as he is “even taking the trouble of creating a new class of shares.”

Read more: Facebook is the new Google

And see: People spend more time with Facebook friends than actual friends

The economy

We just got our first look at U.S. growth in the January-to-March quarter, which showed the economy sputtered and expanded by a weaker-than-expected 0.5%. The other economic report hitting before the open covered weekly jobless claims, which rose to 257,000 versus forecasts for 260,000.

And get set for more chatter about yesterday’s Federal Reserve statement, which was viewed as slightly hawkish, yet still got credit for helping stocks end higher.

Check out: MarketWatch’s Economic Calendar

The buzz

Hey, St. Jude STJ, -0.67%  — Abbott Labs ABT, -1.17%  plans to buy you in a $25 billion deal.

Priceline PCLN, -1.39%  said CEO Darren Huston is stepping down following an investigation into his relationship with an employee.

Dunkin’ Brands DNKN, +0.62%  , Time Warner Cable US:TWC  , Valeant VRX, -2.67%  , Dow Chemical DOW, +0.00%  , Ford F, -0.60% , UPS UPS, -0.62% and MasterCard MA, -1.70%  have been among the many companies on the earnings docket before the open.

Reports from Amazon AMZN, -1.37%  , Pandora P, -1.17%   , LinkedIn LNKD, -3.37%  and plenty of others are expected to grab the spotlight after the close.

Elon Musk has made risky financial moves with his companies. Relatedly, he’s promising a mission to Mars within two years.

First Solar FSLR, -3.09%  has been down premarket after the solar company named a new CEO as it released earnings.

The stat

Getty Images

120 — That’s the number of suspects charged yesterday by police in a “Bronx gang takedown.” It’s believed to be the largest gang takedown in New York City history.

The quote

“When a wave washes over sand, ripples will appear. This simple observation was a scientific mystery until Hertha Marks Ayrton read ‘The Origin and Growth of Ripple Marks’ to the Royal Society in 1904. ... Today, 162 years after her birth, we celebrate her legacy as engineer, mathematician, physicist and inventor, her impact still rippling through the scientific community.” — Google’s Doodle honors a relatively obscure brainiac, Hertha Marks Ayrton, whose inventions include a fan for fighting poison gas during WWI.

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