"European shares are trading once again lower. continuing their slide on the back of ever more increasing tensions between North Korea and the U.S.", added analyst Markus Huber at City of London Markets.
The Nasdaq finished the day at 6,216.87, a slide of 135.46, while the S&P 500 lost almost 1.5 percent, ending the day at 2,438.21.
In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely". However, three days of losses have pulled markets sharply lower for the week.
"It's been a bit of a roller coaster this week, with all the rhetoric between the U.S. and North Korea", said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.
In total, 10 of the 11 S&P sectors settled in the red, with utilities (+0.3%) the only gainer.
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United States stocks tumble on North Korea worries
Tech shares sank by 2.2%, with the financials, consumer-discretionary, energy and industrials sectors all falling at least 1.3%. Penney dropped 78 cents, or 17%, to $3.93 Friday after the department store's second-quarter loss exceeded expectations.
China's state media: We won't help North Korea if it attacks
Tensions around the Korean Peninsula started to rise in light of the implementation of the North Korean missile program. Eddie Calvo to express his support to the USA territory amid the threats of an imminent strike from North Korea.
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. "That did temporarily shake investors' complacency, but we think markets are ready to move higher in the back half of the year, and earnings and economic data are going to drive that". The Nasdaq composite lost 40 points, or 0.6 percent, to 6,329.
The recovery fit a recent pattern of investors using dips to put more money in stocks. Shanghai's main index also tumbled 1.6 percent to 3,208.54 while Australia's S&P/ASX 200 dropped 1.2 percent to 5,693.10. Shares of Manulife, which reported better-than-expected results, fell after the company played down talk of a John Hancock spin-off.
US DATA: The other potential driver in markets will be upcoming USA economic data, including monthly inflation figures, which could go a long way to determining expectations for the pace at which the Federal Reserve raises interest rates.
The U.S. equity market is hovering near record levels and volume has been tepid following the onset of summer.
Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures remain well under control. The yield on three-year Treasurys fell 2.0 basis points to 1.804 percent and the return on benchmark five-year government bonds shed 2.0 basis points to 2.004 percent. Brent crude, used to price worldwide oils, gained 29 cents to $52.43 in London.