The Dow Jones industrial average slid 204.69 points to 21,844.01, just shy of its low point for the day. It had gained about 3% for the week so far.
The Standard & Poor's 500 index slipped 0.90 of a point, or 0.04 percent, to 2,474.02. "And while risks remain elevated from a geopolitical perspective, valuations are not necessarily excessive, though full".
Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November.
Read:Few investors are excited about stocks.
North Korea had responded to Trump's previous promise to unleash "fire and fury" with a threat to land a missile near the U.S. Pacific territory of Guam.
However, an Associated Press report that the USA and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats helped to soothe some of the jitters.
It was 0.2 percent lower at 1.1310 francs, compared with highs of 1.1537 francs hit a week ago.
Meanwhile, the Russell 2000 index of small-cap stocks finished out the week 2.7% lower, its biggest one-week decline since February 2016.
A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.
The headlines about North Korea served as a spark to jolt investors out of complacency on the heels of an extended period of calm in the market, said McClellan who shared the following chart in a report.
Stocks rally, but end a bit lower
The Korean story has seen the yen gain around 1.5 percent this week, its biggest rise since mid-May.
On the foreign exchange market, the value of the local currency weakened one-point-five won against the US dollar, closing at one-thousand-143-point-five won.
"For now, tensions are high, yet in all likeliness we will see this intensity simmer down somewhat, with both sides standing to lose more than they would gain from military action", he added. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.48 percent lower.
Adecco shares fell 5.6%. Some say expectations for its server-chip business were just too high (http://www.marketwatch.com/story/nvidia-stock-could-pause-as-server-growth-slows-down-2017-08-10). Over the next three months, the average gain has been good but not great - +1.15%.
In contrast to the US market, global equities remained weak.
Wall Street stocks posted their biggest declines in almost three months on Thursday as President Donald Trump doubled down on his warnings to North Korea over its nuclear programme.
An editorial in China's state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml), published late Thursday local time, added to the pressure on Asian markets.
Below that level lies another key technical chart support level for the dollar at 108.13 yen, a trough the USA currency k plumbed in mid-April.
"Much of the rally (in gold) is because of the increased safe-haven demand", said OCBC Bank analyst Barnabas Gan.