The VIX Index - commonly called the fear gauge - jumped to close at its highest level since the US election.
The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea. A gauge of volatility on the S&P 500, the VIX hit its highest reading for over a month.
"If the market truly believed the North Korea reaction was imminent, I think it would be down a lot more than it is", said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
"When President Trump declared that the U.S. is "locked and loaded should North Korea act unwisely", investors became even more fearful". Gold settled up 1.4% at $1,256.40 an ounce, then rose almost 2% - to almost $1,283 - after Wednesday's settlement.
In the Dow, declines in shares of Merck and those of DuPont, recently down 0.9 per cent and 0.8 per cent respectively, outweighed gains in shares of Apple and those of Microsoft, recently up 1.3 per cent and 0.7 per cent respectively.
Utilities closed up 0.3 percent while the materials sector was the S&P's biggest loser with a 0.9-percent drop.
To that end, gold prices shot up to near $1,300 an ounce - their highest level in several months. The stock fell 85 cents to $12.76. A strong jobs report last Friday gave the dollar index .DXY its strongest daily performance this year.
"He's been pushing the world around for a long time", he said, in reference to the North Korean leader, Kim Jong Un.
Overnight, US president Donald Trump stood his ground, saying after a speech in Bedminster, New Jersey that his 8 August threat of "fire and fury" against Pyongyang may not have been "tough enough". Earlier in the week, Trump said the US would unleash "fire and fury" on North Korea if it continued to threaten the U.S.
Still, there were fewer signs of anxiousness in the markets Friday. It's still the highest it's been since May.More news: Forced out: ARU scraps WA Super Rugby licence
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It is now on track for its biggest weekly drop since the week before the November 8 US presidential election.
Gold prices rose on US-North Korea tensions..
Substantial weakness was also visible among internet stocks, as reflected by the 2.8% slump by the Dow Jones Internet Index.
Traders sold off financial stocks amid speculation that the Fed will decide to hold off on raising interest rates next month.
Valeant's stock, which rallied a day before following quarterly results, sank 9.6 percent to C$17.85 after it said its subsidiaries in Australia were the subject of a tax audit. ANZ fell 1.9%, Commonwealth shed 0.7% and Westpac declined 1.3% after RBA Governor Philip Lowe said the central bank is prepared to be patient on rates for quite some time. The stock jumped, up 21.6 per cent as of 3.40pm, after the maker of luxury handbags and apparel posted results that exceed expectations.
Bond prices rose. The yield on the 10-year Treasury note slipped to 2.19 percent from 2.20 percent late Thursday. United States crude was down 0.9 per cent at $48.16 per barrel, on track for a weekly loss of 2.9 per cent. Rival Advanced Micro Devices was also down 2.6 percent.
United States gold futures for December delivery was mostly unchanged at $1,290.50 per ounce. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers". It was down 0.2 percent at 108.96 yen, after retreating 0.7 percent on Thursday. Two weeks ago it saw its biggest weakly fall against the euro since the start of 2015.
European markets were also in the red following a negative session in Asia. The mood then hit Europe, where Frankfurt's DAX dropped 1.1% and the CAC-40 in Paris fell 1.4%.
In Europe, the pan-continental STOXX 600 index fell 0.9 percent, with falls deepening after a vehicle rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack. The index closed on record for the ninth trading session on Monday.