US STOCKS-Markets down after Japan quake; some retailers gain

Thu Apr 7, 2011 12:32pm EDT

* Japan ETF, Nikkei futures fall on quake news

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

* Jobless claims fall slightly more than expected

* Indexes down: Dow 0.3 pct, S&P 0.2 pct, Nasdaq 0.1 pct

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

By Ryan Vlastelica

NEW YORK, April 7 (Reuters) - U.S. stocks slipped on Thursday after another powerful earthquake hit Japan, renewing concerns about supply disruptions and the country's ongoing nuclear issue, but markets were off their lows as a number of retailers rallied on strong monthly sales.

There were no reports of injuries in the quake, which had a magnitude of 7.4 and triggered a tsunami warning, but investors remain cautious on the region after the March 11 devastating quake and tsunami. For details, see [ID:nL3E7F72Y2]

The iShares MSCI Japan Index ETF (EWJ.P) dropped 0.5 percent, rebounding off earlier lows, while dollar-denominated Nikkei futures NKc1 slid 1.2 percent. U.S.-listed shares of Sony Corp (SNE.N) fell 0.9 percent. The CBOE Market volatility index .VIX spiked 2.8 percent after the news of the quake.

"Right now I'm waiting to see the extent of the damage, though I've been picking through some stocks to see which could be impacted by disruptions," said Tim Hartzell, who oversees $300 million as chief investment officer for Houston-based Sequent Asset Management.

Hartzell, whose fund invests in Japanese stocks through exchange-traded funds, said he might buy on weakness. "I'm looking at auto manufacturers, and I'm definitely looking to buy Honda if it gets cheap enough," he said.

Honda Motor Corp (HMC.N) rose 0.2 percent on volume that neared its 50-day average.

The March 11 quake has left an official toll of 12,554 dead and another 15,000 missing.

The Dow Jones industrial average .DJI was down 41.97 points, or 0.34 percent, at 12,384.78. The Standard & Poor's 500 Index .SPX was down 3.10 points, or 0.23 percent, at 1,332.44. The Nasdaq Composite Index .IXIC was down 3.63 points, or 0.13 percent, at 2,796.19.

Stocks had been mostly flat prior to the news of the quake, with the S&P 500 encountering strong technical resistance that stymied gains after a larger-than-expected drop in weekly jobless claims and March retail sales that topped expectations. [ID:nN0784911]

"The consumer seems to be hanging in there despite higher gas prices," said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management. "That said, the results were mixed, and I don't think we'll see the full impact of gas prices until next month."

Among retailers, Costco Wholesale Corp (COST.O) beat expectations, and its shares gained 4.1 percent to $78.08. Macy's Inc (M.N) rose 1.9 percent to $25.60 while Target Corp (TGT.N) fell 1.9 percent to $49.99. The S&P retail index .RLX was 0.6 percent higher.

Bed Bath and Beyond Inc (BBBY.O) surged 11 percent to $54.99 a day after it forecast full-year earnings growth that would beat Wall St expectations. [ID:nN06160714] (Editing by Leslie Adler)