By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Middle East tensions drive up oil, gold prices

NEW YORK (MarketWatch)--U.S. stocks erased earlier losses Thursday, with main indexes attempting to push higher as investors shook off early morning jitters that were driven by concerns over poor earnings prospects and worries that the Federal Reserve is moving closer to a rate hike.

Military strikes in Yemen (http://www.marketwatch.com/story/iran-warns-saudi-airstrikes-in-yemen-will-escalate-tension-in-region-2015-03-26) had also sent investors scrambling for cover, pushing up prices of perceived havens such as gold and the yen. Oil prices also jumped on fears of a potential supply disruption from the Middle East.

Ahead of the opening bell, a better-than-expected report on jobless claims did little to alleviate concerns of a marked slowdown in the economy during the first quarter.

The S&P 500 (SPX) edged higher, up 0.1% to 2,063.57, with eight of its 10 sectors trading in the green. Technology stocks which took a beating on Wednesday rebounded.

The Dow Jones Industrial Average (DJI) in early trade declined more than 100 points, but recovered to trade around 10 points higher, a gain of 0.1%, at 17,729.

The Nasdaq Composite (RIXF) was up 0.1% at 4,879.

Implied volatility on the S&P 500, as measured by the CBOE VIX Index (VIX) also subsided after an early jump and was at about 15.

Bruce McCain, chief investment strategist at Key Private Bank, said that investors certainly have room to worry given that earnings estimates declined markedly, while the economy has softened.

"We've lost the support of the Fed's QE program, while there is anxiety about the impending interest rate increases. With multiples this high, there are more chances of corrections," McCain said.

McCain stressed that this is still not a time to be fully out of stocks, especially for longer-term investors.

Michael O'Rourke, chief market strategist at JonesTrading, believes what's happening is the market is reassessing data and starting to view previous tailwinds as headwinds.

"When one considers the trends behind the major top-down elements that investors watch--1. fundamentals in the form of earnings, 2. policy in the form of the Fed, and 3. economic data--all three were previous tailwinds that appear to be transforming to headwinds as of late," O'Rourke said in a note.

The Stoxx Europe 600 index slid 1.6% ion Thursday trade. The Nikkei 225 index posted the biggest losses in two months, with a 1.4% decline.

Read: Stocks are overpriced, overleveraged, headed for trouble (http://www.marketwatch.com/story/stocks-are-overpriced-overleveraged-headed-for-trouble-2015-03-25)

Middle East tension also added to the mix. Investors drove up gold prices (GCM5), which pushed through the psychologically important level of $1,200 an ounce, while oil prices (CLM5) surged more than 4% as news of a coordinated strikes in Yemen by five Gulf states and Egypt triggered worries about crude supply. The yen (USDJPY), another perceived-safe-haven asset, also surged against the dollar, but gave back some gains.

Read: Oil prices surge as Saudi strikes in Yemen trigger supply worries (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)

(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26) (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26) (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)In economic news, the number of people who made first-time claims for weekly unemployment benefits (http://www.marketwatch.com/story/jobless-claims-drop-9000-to-five-week-low-of-282000-2015-03-26)fell more than expected, in a sign that companies are keeping their workers despite what appears to be a marked slowdown in first-quarter growth.

Stocks to watch: Shares of SanDisk Corp.(SNDK) plunged more than 18% after the company cut its sales outlook (http://www.marketwatch.com/story/sandisk-shares-sink-after-revenue-outlook-cut-2015-03-26).

Accenture PLC(ACN) shares jumped after the management consulting firm beat Wall Street profit expectations. The company also offered an upbeat full-year sales outlook.

Red Hat Inc.(RHT) shares rose on the heels of better-than-expected results (http://www.marketwatch.com/story/red-hat-apollo-education-pvh-earnings-in-focus-2015-03-24) released on Wednesday.

For more on notable movers, read Movers & Shakers column (http://www.marketwatch.com/story/gamestop-lululemon-restoration-hardware-earnings-in-focus-2015-03-26).

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