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

* Strong aftershock raises worry of wider scale problem

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

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

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to close)

By Angela Moon

NEW YORK, April 7 (Reuters) – Wall Street slipped on
Thursday after a major aftershock in Japan reignited fears
about nuclear 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 losses as the data
underpinned evidence of a sustained economic recovery.

Investors sought protection against further market declines
following news of 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 1.1 percent at 17.08, 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 prior to the news of the quake.
The S&P 500 encountered strong technical resistance that
stymied gains after a larger-than-expected drop in weekly U.S.
jobless claims and the 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 7.02 billion on the New York Stock Exchange,
NYSE Amex and Nasdaq, compared with last year’s estimated daily
average of 8.47 billion.

The aftershock in Japan did not cause a tsunami or any
detectable damage at the crippled Fukushima Daiichi nuclear
plant. For details, see [IDm: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 earlier lows, while dollar-denominated
Nikkei futures (NKc1: Quote, Profile, Research) slid 1.6 percent.

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 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.

New York-traded shares of Honda Motor Corp (HMC.N: Quote, Profile, Research) rose 0.1
percent to $34.20.
(Reporting by Angela Moon; additional reporting by Doris
Frankel; Editing by Leslie Adler)

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