Meanwhile, the Russell 2000 index of small-cap stocks looked poised for a weekly drop of almost 3%, its biggest one-week decline since February 2016.
"Markets are looking for any reason at all for a reset".
"Of course it's all come at a time when share markets are due for a correction, so North Korea has provided a ideal trigger", he added. Macy's sank 10.3 percent and Kohl's lost 5.8 percent.
The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.
The S&P 500 volatility index jumped again on the latest jawboning in the US-North Korea standoff.
Until this week, the equity market had managed to shake off negative news, including previous saber-rattling over North Korea and failures in Washington to pass high-profile bills, such as repealing and replacing Obamacare.
USA stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
USA stocks rose on Friday as Wall Street clawed back from a sharp decline in the previous session, though geopolitical uncertainty continued to be the focus for investors, contributing to weekly declines.
Many market participants have been calling for a significant decline on the S&P 500. "If the answer is 'yes, ' then you better get defensive".
"What has changed this time is that the scary threats and war of words between the USA and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney, as quoted by Reuters.
"There was some skittishness earlier but then some buyers stepped in", he said. I'd look into energy, materials, industrials, tech and financials.
Read:Few investors are excited about stocks.
The data comes amid tepid inflation that has remained below the Fed's 2 percent target, despite low unemployment. Yields on bonds move inversely to their price.
CURRENCIES: The euro slipped 0.1 percent to $1.1176 while the dollar was steady at 109.20 yen.
Wall Street's so-called "fear gauge", the CBOE Volatility Index, hit the highest levels since Election Day on Friday (http://www.marketwatch.com/story/wall-streets-fear-gauge-on-course-for-biggest-weekly-surge-in-2-years-2017-08-11), after a spike on Thursday but was retreating in recent trade. The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president.
"We're not very oversold yet so the market still has more downside left to it", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.
"We're due for a little correction here".