"What's happening in the Middle East can be described as an inflation story because part of the easy money we have and the fact that China is manipulating its currency is contributing to much higher commodity prices, which is making it very destabilizing in a lot of poor countries and a lot of emerging markets," Jason Trennert, chief investment strategist at Strategas Research Partners told CNBC.
"But I'm pretty optimistic about what's happening in the U.S. and this is going to reinforce a move away from emerging market equities and toward developed market equities."
Oil prices pared earlier gains and slipped below $86 a barrel following the news, easing tensions about a potential supply disruption in the region, while Gold fell below $1,360 an ounce. The dollar briefly pared gains, but remained strong against a basket of major currencies.
On the earnings front, Dow component Kraft reported quarterly earnings in line with expectations after the bell Thursday, but the stock struggled after guidance failed to inspire buyers.
Expedia tumbled after the largest online travel agency posted a profit on stronger bookings, but the results were weaker than expected. (Watch Expedia CEO on CNBC.)
Tata Motors jumped more than 10 percent after the Indian automaker posted quarterly net profit which nearly quadrupled, topping forecasts, on strong demand in India and improved performance at its Jaguar and Land Rover unit.
Nokia and Microsoft have teamed up to take on Google and Apple in the fast-growing smartphone market as the Finnish cellphone maker attempts to regain its leading positionin the sector.
Ford shares rose after the automaker announced it will pay down another $3 billion in debt in the first quarter as it works toward regaining its investment grade rating in the final stage of its four-year turnaround.
ConocoPhillips shares climbed after the oil giant raised its quarterly dividend by 20 percent and said it would buy back $10 billion in shares of its common stock.
Shares of Clorox jumped almost 10 percent to reach an all-time high after billionaire investor Carl Icahn revealed a 9.08 percent ownership in the stakeand added that the stock is undervalued.
Shares of pipeline company Kinder Morgan jumped more than 5 percent in their market debut after the company raised $2.86 billion in an expanded IPO, the biggest ever for a U.S. company backed by private equity firms.
In the day's economic news, the U.S. trade gap widened in December, with the full-year trade gap registering its biggest percentage increase in 10 years, according to the Commerce Department. The U.S. deficit in international trade of goods and services rose 5.9 percent to $40.6 billion from a slightly revised $38.32 billion the month before, topping economists' estimates for a $40.5 billion shortfall.
Meanwhile, consumer sentiment rose to its highest level in eight monthsin early February, boosted by recent tax cuts and optimism about the economy, according to a survey from Thomson Reuters and the University of Michigan.
Coming Up Next Week:
MONDAY: NY Fed Pres speaks
TUESDAY: Retail sales, Empire state mfg survey, import & export prices, Treasury international capital, business inventories, housing market index, Cleveland Fed Pres speaks, Dodd-Frank hearing, Geithner testifies before US House, Fannie/Freddie reform hearing, credit card default rates reported, 13-F filings due; Earnings from Barclays, Dell and Tesla
WEDNESDAY: Weekly mortgage apps, housing starts, PPI, industrial production, House hearing on FCIC report, oil inventories, FOMC minutes; Earnings from Comcast, CBS, NetApp and Nvidia
THURSDAY: Weekly jobless claims, CPI, leading indicators, Philadelphia Fed survey, Chicago Fed Pres speaks, money supply; Earnings from Barrick Gold, AngloGold and Nordstrom
FRIDAY: Earnings from Campbell Soup
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