While at his golf club in Bedminster, New Jersey, President Trump pledged North Korea would be "met with fire and fury like the world has never seen" amid the country's latest nuclear threats. But Michael said the overall market was still expected to saw-tooth its way higher due in part to a batch of better-than-expected earnings and low interest rates, despite the shift toward raising rates. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group in NY.
While markets shrugged off news earlier in the day that North Korea had developed nuclear warheads, Trump's threatening reaction later in the day prompted a more nervous reaction from investors.
Considerable weakness is also visible among tobacco stocks, as reflected by the 1.1% drop by the NYSE Arca Tobacco Index.
All three major stock indexes dropped 0.2 per cent at the close, with the Dow Jones Industrial Average finishing at 22,085.34, halting a almost two-week run of closing records.
In the United Kingdom, the stock of TV giant ITV was down 1.9 percent in early trading, and Sky shares were down 0.5 percent, while Germany's ProSiebenSat.1 fell 1.2 percent.
The recovery fit a recent pattern of investors using dips to put more money in stocks.
The pan-European STOXX 600 was down 0.7% at closing, France's CAC 40 fell 1.4% after a auto hit a group of soldiers in Paris in what is thought to have been a deliberate act, and a fall in bond yields saw Germany's DAX down 1.1%.
The market indexes wavered between small gains and losses for much of the morning, then veered lower by afternoon.
S&P 500 e-minis were down 4.5 points, or 0.18 percent, with 209,543 contracts traded.
The back-and-forth came on the heels of reports the United States intelligence community has determined North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles. Germany's DAX Index fell 0.6 percent, while the UK's FTSE 100 Index retreated 1.2 percent, and France's CAC 40 Index slid 1.4 percent.
Nevsun Resources Ltd offset some of the material group's gains, plunging 18.4 percent to C$2.685 after the company reported disappointing quarterly results. The yield on the 10-year Treasury note held steady at 2.26%.
The Dow closed down 205 points Thursday, in its biggest decline since May 17, after U.S. President Donald Trump rejected criticism that his threats to release "fire and fury" had been too inflammatory.
Priceline Group slumped 6.5 percent after issuing a profit forecast that was weaker than analysts were expecting. Regions Financial shed 23 cents, or 1.6 percent, to $14.07. The euro slid to 1.1752 dollars from 1.1793.