"Although it is considered highly unlikely that this tension will escalate into a nuclear war, the market still needs to see how President Trump will eventually deal with his advocating "fire and fury" against North Korea's threat", said Margaret Yang Yan, market analyst at CMC Markets Singapore.
The broader Topix fell 1.1 percent to 1,617.90 and the JPX-Nikkei Index 400 shed 1.0 percent to 14,375.72.
Small attributed a large part of the Dow's decline to disappointing earnings from Disney after the media giant reported a weak quarter, said it would pull its movies from Netflix and start two of its own video streaming services.
With the rhetoric rumbling on, Europe's top-rated German bond yield held near six-week lows. The escalation of tension and the war of words between the USA and North Korea has brought in a lot of jitters into the stock markets and this has led to a crash in the stock markets all around the world. The Standard & Poor's 500 index dropped 1.4 percent to 2,438.21.
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".
"I think a few investors are capitulating to it".
Gold prices held steady after touching their highest in more than two months on Friday and were on track for a weekly gain, buoyed as rising tension between the U.S. and North Korea triggered safe-haven buying. The Swiss franc eased against dollar about 0.1 percent to 0.9645 per dollar, having surged about 1.1 percent on Wednesday.
Nasdaq 100 e-minis were down 39.75 points, or 0.67 percent, on volume of 53,600 contracts.
"It's fantastic when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
The wider S&P 500 index slipped 2.8 points to 2,478.1, while the Nasdaq dropped 18.75 points to 6,365.02.
"Risk aversion is once again the name of the game.as geopolitical tensions mount and investors head for cover in the traditional safe havens", said Oanda analyst Craig Erlam.
But safe havens benefited from the move away from stocks with gold rising by just under one percent after surging 1.3 percent Wednesday.
ENERGY: Benchmark U.S. crude gained 28 cents to $49.84 a barrel in electronic trading on the New York Mercantile Exchange.