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Stocks close off lows hit after earthquake

Stocks fell initially on Japan's latest earthquake, but recovered some of their losses. The Dow average dropped 17 points; the S&P 500 index fell 2 points.

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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.

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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.

President Obama and the Democrats want legislation that would fund the government until the end of the fiscal year on Sept. 30. Funding for the budget expires at midnight on Friday.

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.

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