The Dow Jones industrial average slid 0.9 percent to 21,844.01.
The yen gained against the dollar and other peers on Wednesday on the latest bout of geopolitical tensions stemming from the Korean Peninsula.
Guam which is more than 3,000 km (2,000 miles) to the southeast of North Korea, is home to about 163,000 people and a U.S. Navy base that includes a submarine squadron and a Coast Guard group, and an air base.
The focus on North Korea has largely overshadowed a Labor Department report showing an unexpected drop in USA producer prices in the month of July. The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors further incentive to take to the sidelines at least in stock markets.
A few hours after Trump's warning shot, Pyongyang retaliated by claiming it was planning to strike Guam - a U.S. territory - with missiles.
"The move down now is geopolitical, and short-lived if nothing happens", Joe Saluzzi, co-head of equity trading at Themis Trading.
Markets remained concerned over the risk of a United States first-strike against North Korean nuclear facilities. Australia's S&P/ASX 200 dropped 1.1 percent to 5,696.80.
Trump warns U.S. 'locked and loaded' as North Korea readies missiles
Commenting on the issue, Kim highlighted that the time has come for the USA and North Korea to meet at the negotiating table. It is about 2,200 miles (3,500 km) southeast of North Korea, much closer than it is to any of the United States.
Tropical depression forms off the East Coast
A cold front along the East Coast should keep the depression away from the eastern seaboard. As of Saturday morning it was about 150 miles northeast of the Turks and Caicos Islands.
Pep Guardiola: "We are a strong club"
Brighton , on the other hand, managed to secure a return to the top flight and will compete after an absence of 25 years. Their pre-season exploits have been quite impressive as well, thus leading to increased expectations.
Meanwhile, traders absorbed a report on jobless claims (http://www.marketwatch.com/story/us-jobless-claims-rise-by-3000-to-244000-2017-08-10) that showed that initial claims for us unemployment-insurance benefits continue to reflect a strong labor market, even as they inched slightly higher.
A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th.
The dollar weakened after news that USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase. Net income fell to $3 million from $36 million in the year-ago quarter.
Live Nation Entertainment Inc.(LYV) shares pared gains from strong earnings (http://www.marketwatch.com/story/live-nation-shares-rally-as-results-top-street-view-2017-08-09) reported late Wednesday and closed up 5.6% after reports that Amazon.com Inc.(AMZN) announced it was getting into the event-ticketing business.
The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.
The dollar rose against a trade-weighted basket of currencies on Thursday as investors consolidated positions with the low-yielding Swiss franc and Japanese yen supported amid deepending anxiety over tensions between the United States and North Korea.
In commodities trading, U.S. crude oil was wallowing around $49 to the barrel amid speculation that a predicted gain in American output will offset OPEC-led efforts to trim a global glut. While the French CAC 40 Index fell by 0.6 percent, the German DAX Index slumped by 1.1 percent and the U.K.'s FTSE 100 Index plunged by 1.4 percent.