Flight-to-safety buying helped drive gold higher for a third straight day on Thursday.
The Nasdaq Composite was down 37.30 points, or 0.59%, at 6,315.03.
The Dow Jones Industrial Average .DJI fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 .SPX lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite .IXIC dropped 135.46 points, or 2.13 percent, to 6,216.87.
Stocks going ex-dividend included BT, Royal Dutch Shell, BP, Lloyds, and pharma companies GSK and AstraZeneca, taking around 41 points off the index. President Donald Trump said on Tuesday that USA threats from Pyongyang would be met with "fire and fury", which prompted North Korea to say it was considering plans for a missile strike on the US pacific territory of Guam.
"We've seen this play before, and it usually plays out where it just goes back to the status quo", Jacobsen said. These ranged from an investigation into Russia's possible interference in the 2016 USA presidential election, to concerns about China's risky debt levels, to stubbornly low inflation in the U.S.
Technology companies, which have been the biggest gainers this year as the market hit a succession of record highs, led the broad slide.
South Korea's KOSPI fell 1.3 percent, taking its losses this week to almost 2.7 percent.
The Japanese yen hit an eight-week high against the USA dollar, and US -traded Nikkei stock futures dropped 2 percent to their lowest since mid May.
On Thursday, Federal Reserve Bank of New York President William Dudley offered a positive outlook for the US economy, job market and inflation, saying better conditions would help support the most vulnerable Americans. Twenty-First Century Fox gave up 46 cents, or 1.6 percent, to $27.57.
RETAIL SLUMP: Disappointing quarterly results from big department store chains put investors in a selling mood.
Retailers were all under pressure after Macy's and Kohl's each reported lower second-quarter sales, reviving worries about consumer discretionary stocks.
Trump's remarks on Tuesday that North Korea would face "fire and fury like the world has never seen" weighed on Wall Street and drove up the VIX "fear gauge", or the cost of protection against a drop in the S&P 500. The price rose 1.3 per cent in the previous session, the biggest gain since mid-May.
OIL: Benchmark U.S. crude added 39 cents to settle at $49.56 a barrel on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, gained 29 cents to $52.43 in London.
CURRENCIES: The dollar slipped to 109.48 yen from 109.85 late Wednesday.
In Europe, the Stoxx 600 Index fell 1%.
In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%.
The Russell 2000 is up 15.41 points, or 1.1 percent.
The dollar index.DXY, which tracks the greenback against six rival currencies, was down 0.17 percent to 93.391. Tokyo's Nikkei 225 tumbled 1.3 percent, while Seoul's Kospi fell 1.1 percent. Huge internet conglomerate Tencent Holdings, which is listed in Hong Kong, was down by more than 3%.