The Nasdaq Composite was down 37.30 points, or 0.59 percent, at 6,315.03.
MARKETS OVERSEAS: In Europe, Germany’s DAX was down 1 percent, while France’s CAC 40 fell 1.4 percent.
The threat followed U.S. President Donald Trump’s warning on Tuesday that any threats by Pyongyang would be “met with fire and fury like the world has never seen”.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, said: “While the tough talk about the potential for war (between the U.S. and North Korea) is scary, investors have heard it many times before”.
The Standard & Poor’s 500 index fell 7 points, or 0.3 percent, to 2,466 as of 11:20 a.m. Wednesday on Wall Street.
It is about 2,200 miles (3,500 km) southeast of North Korea, much closer than it is to any of the United States. Banks and department store shares also were among the big decliners.
In overseas trading, stock markets across the Asia-Pacific region saw further downside during trading on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.212%.
“(For) any type of attack coming from North Korea, there is not only a defense umbrella that is multi-layered in term of systems in place in (South) Korea, Japan, in the western Pacific, but also terrestrial systems here in Guam such as the THAAD battery that is stationed here”, he said.
Guam which is more than 3,000 km (2,000 miles) to the southeast of North Korea, is home to about 163,000 people and a U.S. Navy base that includes a submarine squadron and a Coast Guard group, and an air base.
Nvidia fell 4.3 percent, while Advanced Micro Devices gave up 5.5 percent. China’s yuan firmed 0.3 percent against the dollar in a third straight day of gains to hit its firmest level in 10-months on the back of a stronger fixing and continued corporate dollar selling, while data shows inflation holding steady. Dillard’s slumped 15.9 percent after the chain booked a loss for the quarter as increased inventory led to big discounts.
Gold rose $16.70, or 1.3 percent, to settle at $1,279.30 an ounce.
US crude rose 1.08 percent to $49.70 per barrel and Brent was last at $52.78, up 1.23 percent on the day. It has weakened 1.5 percent since hitting a 2-1/2 year high of 1.1910 on August 2.
In central bank news, the Reserve Bank of New Zealand held steady on interest rates at 1.75 percent on Thursday. Last month, the US twice flew a pair of supersonic bombers that took off from Guam over the Korean Peninsula in a show of force after two North Korean tests of intercontinental ballistic missiles. In other precious metals, silver surged 1.7% to $17.20 an ounce after hitting $17.24, its highest since June 14.
CURRENCIES: The dollar slipped to 109.26 yen from 109.85 late Wednesday. The euro slid to $1.1732 from $1.1752.