1st LD Writethru: U.S. stocks continue to drop on geopolitical tensions

U.S. stocks ended mildly lower after volatile trading on Thursday, as investors weighed the geopolitical tensions in the Middle East against an upbeat job report.

The Dow Jones Industrial Average fell 40.31 points, or 0.23 percent, to 17,678.23. The S&P 500 dipped 4.90 points, or 0.24 percent, to 2,056.15. The Nasdaq Composite Index was down 13.16 points, or 0.27 percent, to 4,863.36.

Tensions intensified in the Middle East after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen.

Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain and Qatar said Thursday they had decided to act to protect Yemen against "aggression" by the Houhti militia, according to a joint statement.

Oil prices spiked Thursday after Saudi Arabia and its allies launched air strikes on Yemen, with both the U.S. oil and Brent crude surging more than 4 percent.

The geopolitical worries of Yemen overshadowed the negative effect of supply glut.

U.S. crude production reached 9.422 million barrels a day last week, the highest level since 1983, according to Energy Information Administration, the Energy Department's statistical arm.

Economic data came out positive. U.S. jobless claims fell to a five-week low, and investors believed such data pointed to a healthy and expanding labor market.

In the week ending March 21, the advance figure for seasonally adjusted initial claims decreased 9,000 from the previous week's unrevised level to 282,000, well below market consensus of 293,000, said the U.S. Labor Department Thursday.

U.S. stocks fell sharply Wednesday, with all three major indices extending their losses into a third straight session. Endite