At the close trading in NY, the Dow Jones Industrial Average was down 204.69 points, or 0.9%, to 21,844.01, its biggest one-day fall since May 17.
The broad-based S&P 500 was hit even harder, dropping 1.5 percent to close at 2,438.22, while the tech-rich Nasdaq Composite Index lost 2.2 percent 6,216.87.
US Defense Secretary Jim Mattis, who often has emphasized the devastating costs of any conflict with North Korea, seemed to back up Trump's tone.
Shares of Walt Disney were down 4.23 percent, the biggest drag on Dow, as investors doubted whether the company can succeed with its plan to launch its own streaming services rather than rely on Netflix to reach online viewers. The Fed, which raised its key interest rate in March and June, has signaled it plans a third rate hike before the end of this year.
Data storage company Seagate Technology (STX) is posting a standout gain within the hardware sector, climbing by 2.1%.
Canadian Tire Corp Ltd rose 3.4 percent to C$146.65. Same-store sales rose 0.4% compared to a year ago, while overall sales in the quarter totaled $4.144 billion, down from $4.18 billion a year ago.
But safe havens benefited from the move away from stocks with gold rising by just under one percent after surging 1.3 percent Wednesday.
Traders sold off utilities stocks.
Bond prices were little changed. Natural gas gained 2 cents to $2.82 per 1,000 cubic feet.
USA gold futures gained 0.26 percent to $1,293.50 an ounce.
Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November.
The benchmark United States yield yesterday was just above 2.2 per cent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.
The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment.
The dollar slipped to 109.04 yen from 109.26 late Thursday. Heating oil fell 1 cent to $1.63 a gallon.
The last time the S&P closed down more than 1 percent was May 17 when it fell 1.8 percent.
The Dow fell more than 200 points, a almost 1% drop, and its biggest dip in three months.
The biggest risers on the FTSE 100 Index were Coca-Cola HBC up 219p to 2,592p, WorldPay up 19p to 407.5p, Randgold Resources up 95p to 7,475p, WPP up 19p to 1,581p.