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Stocks closed well off the lows of the day after plunging in the wake of a powerful earthquake in Japan renewed investor fears about supply disruptions and the ongoing nuclear crisis, and as oil jumped above $110 a barrel.
The Dow Jones Industrial Average fell 17.26 points, or 0.14 percent, to close at 12,409.49, after tumbling nearly 100 points immediately after news of the quake. The blue-chip index, which rose slightly in the previous session to the highest level since June 2008, has fluctuated between a loss of 30 to 100 points since the quake was reported.
The S&P 500 fell 2.03 points, or 0.15 percent, to close at 1,333.51, while the Nasdaq fell 3.68 points, or 0.13 percent, to close at 2,796.14. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 17.
Most key S&P 500 sectors declined, led by utilities and industrials, while energy rose.
Stocks continued to trade lower even after news that a tsunami warning was lifted, and the magnitude of the Japan quake was slightly less than first reported, because there was "no reason to come back," said Dan McMahon, director of equity trading at Raymond James.
"There are times to do nothing, and this may well be one of them," McMahon said.
At issue is trading continues to take place amid extremely thin volume, and there's no real catalyst to move stocks higher, he said.
"The general concensus among investors is they don't see a lot of opportunities," McMahon said. "They are of the mind that stocks are fairly valued, if not expensive."
The earthquake hit an area 60 miles east of Sendai and 90 miles from Fukushima, near the area devastated by a March 11 earthquake and tsunami. Of the hundreds of aftershocks that have followed the earlier quake, none have been 7.0 or stronger.
As earnings season is about to begin in full swing, the quake was a reminder to investors that they still don't know the full effects of the first quake, said Doreen Mogavero of Mogavero & Lee.
"There is a real reason to be concerned how the Japanese economy will effect the rest of the world," Mogavero said, adding that it's not surprising stock prices continue to drop. "Looking at rate hikes, inflation fears, oil crossing to $109...there are a myriad of things that would cause someone who has made a lot of money to take some off the table."
Before the quake hit, stocks were trading mixed in a narrow range, as the market took a pause after the Dow broke through to a new high on Thursday, and the S&P 500 broke above 1,333, a recent resistance point. Those gains have largely reflected investor sentiment that first quarter earnings will be good, according to Marc Pado, market strategist and technical analyst at Cantor Fitzgerald.
The S&P 500 reached a recent high of just under 1,344 on Feb. 18, and remains below that level in part because of the performance of bank stocks, which make up a significant percentage of the index, Pado said.
GE declined following the earthquake news. The conglomerate has become the U.S. company most tied to the Japanese crisis because it designed the six nuclear reactors at Japan's Fukushima Daiichi nuclear power plant. GE is also a minority shareholder in NBCUniversal.
Oil prices gained following a brief retreat after the quake was reported, as traders absorbed news that the quake was not as strong as one on March 11. London Brent crude closed 0.3 percent higher, ending at $1.22.67 a barrel, while U.S. light crude gained 1.35 percent, to close at $110.30. Meanwhile, gold prices closed at a fresh record high of $1,458.50 an ounce.
Shares of most airline companies fell after news of the quake, ncluding AMR, United Continental and Delta Air Lines .
Meanwhile, Boeing shares rose after the firm said it took orders for 18 commercial aircraft in the latest week.
On the tech front, Cisco shares fell lower after CEO John Chambers, acknowledged challenges remain in its core business of networking while vowing on video at a Wells Fargo technology conference to "double down." Meanwhile, Citigroup cut its price target on the networking firm to $20 from $22.
Retail sales data at stores open at least a year, or same-store sales, came inbetter-than-expected in March. Shares of Walgreen, Costco and teen clothing retailers Hot Topic and Zumiez gained after reporting strong March sales.
But not all retailers delivered upbeat March sales, as firms such as Target andGap disappointed.
Bed, Bath & Beyond, meanwhile, soared more than 10 percent after the home goods retailer reported a 25 percent earnings boost. In addition, Credit Suisse and Wedbush raised their price targets on the firm. And Pier 1 Importsalso jumped after the home furnishing chain delivered a 65 percent gain in fiscal fourth-quarter profits.
Rite Aid gained after the drugstore chain operator said that its quarterly loss was slightly smaller than a year earlier as its revenue stabilized after more than two years of declines.
A handful of companies declared dividend hikes. PNC Financial Services traded flat despite a 250 percent boost in its dividend. Qualcomm fell slightly despite announcing a quarterly cash dividend. Ingersoll-Rand gained after the diversified industrial company announced a 71 percent dividend increase and and stock buyback up to $2 billion.
XenoPort shares skyrocketed more than 50 percent after the FDA approved Horizant, extended-release tablets for the treatment of Restless Legs Syndrome in adults. XenoPort co-developed the product with GlaxoSmithKline .
Volume on the consolidated tape of the New York Stock Exchange was 3.9 billion, while 911 million changed hands on the NYSE floor.
In the day's economic news, initial claims for unemployment fell 10,000 to 382,000 from an upwardly revised 392,000, the Labor Department reported. The government had reported claims last week had fallen to 388,000, and economists surveyed by Reuters had expected claims would fall to 385,000 last week. The four-week moving average of unemployment claims fell by 5,750 to 389,500.
The U.S. House of Representatives passed a stopgap spending bill to fund the government for just another week, on the condition of $12 billion in spending cuts. The White House has said it would veto the measure.
The ECB, meanwhile, raised interest rates 25 basis points to 1.25 percent, in response to rising inflation in the euro zone. The decision comes in the wake of Portugal’s late call Wednesday for financial aid from the EU.
The Bank of England, meanwhile, held interest rates at 0.5 percent on Thursday, although inflation is rising in England as well. European stocks ended lower following the news of the earthquake in Japan.