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".
Top military brass and President Trump are being sued by five US military members that want to keep Trump's transgender ban from becoming a reality - "in any capacity".
Apart from geopolitical worries, some technical analysts like Tom McClellan, editor of the McClellan Market Report, blamed seasonality for this week's sharp retreat given August's record as a weak month for stocks.
The S&P 500 volatility index jumped again on the latest jawboning in the US-North Korea standoff.
USA stocks were on track for their biggest weekly loss in months, shaken by disappointing earnings results and an escalation of threats between the US and North Korea.
The news was also greeted with dismay by traders in Asia, with Tokyo down 1.3 percent, Hong Kong losing 0.4 percent and Seoul registering a 1.1-percent decline.
FINANCIALS FALLING: Several financial sector companies also helped pull down the market. Bank of New York Mellon slid $2.09, or 3.9 percent, to $51.95, while Citizens Financial Group Inc. shed $1.32, or 3.8 percent, to $33.71. Broadcom gave up $5.72, or 2.3 percent, to $243.45.
Shares of Kohl's were down 8.4 percent, while Macy's fell 4 percent after the department store operators reported a fall in sales. Large retailers Macy's and Kohl's tumbled on Thursday after they reported disappointing second-quarter results.
Nvidia's quarterly revenue in its data center and automotive businesses missed estimates, dragging the chipmaker's shares down 5.43 percent.
The Canadian dollar was trading at an average price of 78.67 cents USA, down 0.04 of a US cent. The stock fell $1.01 to $22.02. It added 39 cents to $49.56 a barrel overnight. While the German DAX Index has edged down by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 1 percent.
The CBOE Volatility Index (VIX - 11.11) gained 0.2 point, or 1.4%.
The bond market was without direction: the yield of u.s. Treasury bills to 10 years, which evolves to the inverse of the bond price, appears to 2,190 %, compared to 2,198 % Thursday evening, and that bills to 30 years at 2,786 %, compared to 2,773 %. Copper fell 2 cents to $2.90 a pound.
MARKETS OVERSEAS: Major indexes in Europe were headed lower.
For the week, the Dow is on track to fall 0.9%, its biggest one-week drop since April. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman all rose and the Dow Jones US defense index was up 1.6% after hitting a record high.
Excluding food and energy prices, core consumer prices still crept up by 0.1 percent in July, matching the increases seen in the three previous months.