The major averages all closed in positive territory, although the tech-heavy Nasdaq outperformed its counterparts.
At 9:38am ET (1338 GMT) the Dow Jones Industrial Average was down 85.43 points, or 0.39%, at 21,963.27, and the S&P 500 was down 10.31 points, or 0.42% at 2,463.71. Apple is still up 35% for 2017 and hovers near a record high.
Positive sentiment was also generated by a report from the Labor Department showing just a modest uptick in consumer prices in the month of July.
The dollar index fell 0.3 percent, with the euro up 0.36 percent to $1.1812. Economists had expected prices to rise by 0.2 percent.
The US producer prices data was slightly below consensus forecasts with both headline and core prices declining 0.1% on the month. Lam Research Corp. climbed $4.82, or 3.2 percent, to $154.26.
Traders took heart in a measure of US consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.
Global stock markets have sunk further into the red after Donald Trump ratcheted up his fiery rhetoric over North Korea's nuclear threats.
If the North Korean regime "does anything" to the United States or a USA ally "things will happen to them like they never thought possible", he told reporters on Thursday, according to Bloomberg.
THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and US indices have retraced from record levels over the last two days".
But are investors really nervous about a possible military conflict with Kim Jong Un? Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover.
In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%. The index bounced off its lowest closing level in six months.
Seagate Technology gained 2.3 percent after investor ValueAct disclosed that it had acquired a 7.2 percent stake in the digital storage company.
Biotechnology, tobacco, and transportation stocks also saw considerable strength, while steel stocks extended a recent move to the downside.
Market analysts expect that the pullback in stocks due to the increasingly aggressive tone in exchanges between Washington and Pyongyang will continue, although investors hope that the selling will not escalate to a correction - a decline of 10 percent or more. Australia's S&P/ASX 200 edged down almost 0.1 percent to 5,760.90, while South Korea's Kospi fell 0.5 percent to 2,357.84. Japan was closed on a public holiday.
In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move.
"If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so", the editorial's authors said.
Retailers' results are being keenly watched by investors to gauge the companies' strategy to counter No. 1 online retailer Amazon.com's growth.