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>, 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.
Among retailers, Costco Wholesale Corp
The Dow Jones industrial average <.DJI> was down 17.26 points, or 0.14 percent, at 12,409.49. The Standard & Poor's 500 Index <.SPX> was down 2.03 points, or 0.15 percent, at 1,333.51. The Nasdaq Composite Index <.IXIC> 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.
U.S. Treasuries, the traditional safe haven asset, rose only marginally after the earthquake.
The iShares MSCI Japan Index ETF
Bed Bath and Beyond Inc
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
(Reporting by Angela Moon; additional reporting by Doris Frankel; Editing by Leslie Adler)