The sabre-rattling - sparked when President Donald Trump stunned the world with an apocalyptic warning to unleash "fire and fury" on North Korea - continued Thursday as Pyongyang mocked the United States leader as "bereft of reason".
Markets reacted with dismay to Trump's fresh warning Thursday that his earlier threat to unleash "fire and fury" on the reclusive nuclear-armed state may not have been "tough enough".
"The North Korea situation is still unstable and investors are controlling risk and taking profit after recent gains", said Sam Chi Yung, a Hong Kong-based strategist at South China Financial Holdings.
North Korea responded with a statement by its official KCNA news agency claiming Trump is "driving" the Korean peninsula to the "brink of a nuclear war".
The risk-off tone triggered by the increase in tension between the USA and North Korea yesterday picked back up during today's U.S. session. "Hopefully Kim Jong Un will find another path!"
In other news, USA wholesale inflation dropped in July, the first contraction in almost a year and another data point that could weaken the case for the Federal Reserve to raise the benchmark interest rate again later this year. Yields fall when bond prices rise.
Rising costs for housing, medical care and food helped push the Consumer Price Index (CPI) up 0.1 percent in July, seasonally adjusted, after no change in June and a 0.1 decrease in May, the US Labor Department said.
Strong gains in NY, where the Dow saw repeated record highs up until three day ago, had kept investor optimism high when news of the conflict first broke, Currie said.
Still, the S&P and the Dow were on track to post their biggest weekly loss in about five months and the Nasdaq on course to post its biggest weekly fall in about six weeks.
The major averages ended the session just off their worst levels of the day.
At 10:57 a.m. ET (1457 GMT), the Dow Jones Industrial Average was up 54.38 points, or 0.25 percent, at 21,898.39, the S&P 500 was up 8.69 points, or 0.35 percent, at 2,446.90.
In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday.
The Russian dollar-traded index RTS was down 1.49 percent, and ruble-traded MICEX fell 1.29 percent by midday.
U.K.'s FTSE 100, the German DAX and the French CAC 40 all dropped more than 2.3% this week.
In commodities trading, crude oil futures are slipping $0.10 to $48.49 a barrel after tumbling $0.97 to $48.59 a barrel on Thursday.
The local currency was trading at 1,147.55 won against the US dollar, down 5.55 won from the previous session's close.