Stocks saw some strength during trading on Friday, regaining ground following the sell-off seen in the previous session. Those losses dragged the S&P 500 down 1.5% for the week, its worst such showing since the week ended March 24.
The major averages all closed in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. The Dow slumped 204.69 points or 0.9% to 21,844.01, the Nasdaq plummeted 135.46 points or 2.1% to 6,216.87 and the S&P 500 tumbled 35.81 points or 1.5% to 2,438.21.
The dollar index fell 0.3 percent, with the euro up 0.36 percent to $1.1812.
On the USA economic front, a report released by the Labor Department showed a modest uptick in consumer prices in the U.S. in the month of July.
A Labor Department report showed its producer price index posted a surprise drop in July, down 0.1% for the largest slide in nearly a year.
Energy stocks retreated 0.5 percent, despite higher oil prices.
The index had settled within 0.30% of its previous day's close for 15 straight sessions.
The South Korean Won is also suffering, falling by 0.8% to a four-week low against the USA dollar.
The smaller than expected increase in consumer prices has led to optimism that the Federal Reserve will not be in a hurry to raise interest rates.More news: Transfer Rumour: Manchester City plotting shock move for Barcelona midfielder Sergio Busquets
With President Donald Trump warning North Korea of "fire and fury", investors have become concerned that the war of words between Washington and Pyongyang could spiral out of control.
"There is a low probability that we will have a war with North Korea", he said, and a larger pullback in stocks is "a buyable drop". He said that North Korea "can be very very nervous" if it acts on either the United States or its allies, and warned that "things will happen to them like they never thought possible". And in a Friday morning post on social media site Twitter, Trump wrote: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!"
Trump's threats have escalated since reports broke at the beginning of the week that North Korea had successfully produced a nuclear warhead that could fit inside its missiles.
Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4%.
On average, the S&P 500 falls 5% or more every 10 weeks and the index falls 10% every 33 weeks, according to data analyzed by AllianceBernstein going back to 1928.
Meanwhile, the Russell 2000 index of small-cap stocks finished out the week 2.7% lower, its biggest one-week decline since February 2016. Autodesk (ADSK) and Red Hat (RHT) posted notable gains.
Investors are losing enthusiasm for Canada's banking stocks as a slowdown in the country's housing market dents banks' growth prospects, with insurance companies seen as a better bet to benefit from higher interest rates.
South Korea's Kospi stock market index has fallen by 0.4% today, adding to the 1% wiped off shares on Wednesday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189%.
Retail results are also on investors' mind as the second-quarter earning season winds down.