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Part of Tokyo's Shinjuku skyline. Image source: Itoshin87 via Wikimedia Commons.

U.S. investors are all too aware of how bad the third quarter has been for domestic stocks, with key market benchmarks set to finish down between 5% and 10% for the quarter. Yet in Japan, the situation has been much worse recently, and despite a jump of more than 450 points overnight, the Nikkei 225 (NIKKEIINDICES:^NI225) ended the quarter with a loss of 14%, its worst showing since mid-2010. Even as the day's rebound gave market participants some hope, big questions remain about whether the nation can overcome its economic challenges.

A broad-based bounce
Wednesday's trading saw substantial gains in many names that are well-known among U.S. investors. Entertainment and electronics giant Sony and automaker Toyota Motor posted gains of 4% and 3%, respectively, during the Japanese stock market's session, and financial companies joined export-oriented businesses in showing the best improvements.

On the other side of the fence, though, Japan Tobacco fell 10% after announcing a deal to acquire the non-U.S. rights from Reynolds American (NYSE:RAI) to its super-premium Natural American Spirit brand. The $5 billion deal had Japanese investors believing that Japan Tobacco overpaid in the deal, despite the incredible growth that Reynolds American has seen from the division. Reynolds stock rose 1% early in the U.S. trading session, and with the company retaining the domestic rights to the brand, it's easy to understand why investors seem to prefer Reynolds' position to Japan Tobacco's.

Can Japan stop counting on stimulus?
The big-picture problem facing Japan right now is one that U.S. investors can understand. Japan has made major adjustments to its economy for a much longer period than Americans have had to deal with on this side of the Pacific, yet even though the long-term success of its policy moves has been mixed at best, Japan's government and central bank still remain at the focal point of calls for action. As key elements in the Japanese economy falter, investors seem convinced that it's the government rather than the private sector that will be the solution to its problems.

At some point, though, markets will have to relearn how to survive in a stimulus-free environment -- or at least in one in which the central bank and other policymakers have far less influence on the everyday workings of economic activity. The longer the current level of intervention continues, the more nervous investors will be that the economy won't be able to survive on its own, and that would introduce a new systemic risk to the entire global financial system at a time when most of the world isn't in a good position to deal with a new threat.

For now, a weak yen and favorable domestic policies are giving Japanese companies all the help they should need to come up with long-term growth strategies. The fact that the stock market isn't responding well suggests that even under relatively favorable conditions, the difficulties in the current environment are too much for Japanese businesses to handle. That could bode ill for the Nikkei for the rest of 2015.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.