US STOCKS-Wall St dips on Japan aftershock; retailers rise

* Strong quake raises worry of wider problem

* Costco, Macy’s sales strong, shares rise; Target falls

* Stocks dip: Dow 0.1 pct, S&P 0.2 pct, Nasdaq 0.1 pct

* For up-to-the-minute market news see [STXNEWS/US]

(Updates trading volume; adds advancers/decliners,
performance of rare-earth stocks)

By Angela Moon

NEW YORK, April 7 (Reuters) – Wall Street slipped on
Thursday after a major aftershock in Japan reignited fears
about its nuclear power crisis, but greater faith in the U.S.
economy’s steady path held losses in check.

A rise in retail stocks after better-than-expected March
chain-store sales limited broader market declines as the data
added to evidence of a sustained economic recovery.

Investors sought protection against further market declines
following the magnitude 7.4 aftershock in Japan, but a move to
safer assets did not materialize.

“It made people think that this is an ongoing crisis that
could further hurt stocks, but one thing we didn’t see is the
flight to safety,” said John Canally, economist at LPL
Financial in Boston, Massachusetts.

The CBOE Volatility Index VIX (.VIX: Quote, Profile, Research), Wall Street’s
so-called fear gauge, closed up 1.2 percent at 17.11 after
rising more than 2 percent earlier.

Chris McKhann, analyst at stock and options website
optionMonster.com in Chicago, said the VIX had little reaction
to the earthquake news, “further supporting the fact that
nothing seems to shake this market.”

Stocks had been mostly flat in early trading. The S&P 500
encountered strong technical resistance that stymied gains
after a larger-than-expected drop in weekly initial U.S.
jobless claims and data on the surprisingly strong March retail
sales. [ID:nN0784911]

Among retailers, Costco Wholesale Corp (COST.O: Quote, Profile, Research) beat
expectations, and its shares gained 3.8 percent to $77.82.
Macy’s Inc (M.N: Quote, Profile, Research) rose 0.8 percent to $25.40, while Target Corp
(TGT.N: Quote, Profile, Research) fell 2.6 percent to $49.62.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 17.26
points, or 0.14 percent, at 12,409.49. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) was down 2.03 points, or 0.15 percent, at
1,333.51. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 3.68
points, or 0.13 percent, at 2,796.14.

Volume was 7.06 billion shares on the New York Stock
Exchange, NYSE Amex and Nasdaq, compared with last year’s
estimated daily average of 8.47 billion.

Bed Bath and Beyond Inc (BBBY.O: Quote, Profile, Research) surged 10.5 percent to
$54.55 a day after it forecast full-year earnings growth that
would beat Wall Street expectations. [ID:nN06160714]

U.S.-listed shares of rare-earth stocks gained sharply,
including Canada’s Rare Element Resources (REE.A: Quote, Profile, Research), up 16.4
percent at $15.30 in New York. Shares of Avalon Rare Metals
(AVL.A: Quote, Profile, Research) also of Canada, gained 9.6 percent to $9.52.

The aftershock in Japan did not cause a tsunami or any
detectable damage at the Fukushima Daiichi nuclear plant,
crippled from a massive March 11 quake. For details, see
[ID:nL3E7F72Y2]

U.S. Treasuries, the traditional safe-haven asset, rose
only marginally after the earthquake.

The iShares MSCI Japan Index ETF (EWJ.P: Quote, Profile, Research) dropped 0.8
percent, rebounding off lows, while dollar-denominated Nikkei
futures (NKc1: Quote, Profile, Research) slid 1.6 percent.

New York-traded shares of Japanese stocks fell, but some
strategists said they might buy on the weakness.

“I’m looking at auto manufacturers, and I’m definitely
looking to buy Honda if it gets cheap enough,” said Tim
Hartzell, chief investment officer for Houston-based Sequent
Asset Management.

Honda Motor Corp (HMC.N: Quote, Profile, Research) shares rose 0.1 percent to
$34.20.

Declining stocks outnumbered advancing ones on the NYSE by
1,872 to 1,116, while on the Nasdaq, decliners beat advancers
by 1,658 to 935.
(Additional reporting by Doris Frankel; Editing by Padraic
Cassidy)

US STOCKS-Wall St dips on Japan aftershock; retailers rise