"The war of words between the leaders of the US and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada.
Wall Street's fear gauge-the CBOE Volatility Index or the VIX-jumped 36 percent to 15.06.
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.
Companies in the retail space in the U.S. could be of high interest in today's trading following their pre-market earnings releases.
Dai-ichi Life Holdings dropped 1 percent, T&D Holdings fell 2.2 percent while Mitsubishi UFJ Financial Group declined 0.9 percent.
USA crude was unchanged at $48.59 per barrel and Brent was last at $51.84, down 1.63 percent on the day.More news: Trump tells Calvo he's behind Guam "1000%"
Trump doubled down on his remarks Thursday, saying his previous statement may not have been tough enough.
"Obviously we are looking at the increased tensions between the United States and North Korea", said Brad Bechtel, managing director FX at Jefferies in NY.
The 30-year bond last rose 28/32 in price to yield 2.7759 percent, from 2.818 percent late on Wednesday. The spot gold price was up 0.7 per cent at $1,286.07 per ounce by 1400 GMT, after hitting an earlier high of $1,286.40, its highest level since June 8.
Canada's main stock index fell on Thursday despite a slew of better-than-expected quarterly results, as investors sought refuge in safe-haven assets amid rising tensions between the United States and North Korea.
In Europe, the pan-continental STOXX 600 index fell 0.9pc, with falls deepening after a auto rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack.
"The geopolitical tensions could be the catalyst for the market's direction in the next coming weeks depending on how it all shakes out", said Robert Pavlik, chief investment strategist at Boston Private.More news: 'Conte could walk at Chelsea' - Sutton sees trouble brewing at Stamford Bridge
He said: "While the two monetary metals continue to trade mostly on real yield dynamics, some investors reacted to the escalating tension by buying these traditional safe-haven instruments".
Information technology fell 1.24 per cent, hurt by a 16.6 per cent plunge to C$66.50 in Kinaxis Inc stock.
OIL: Benchmark U.S. crude fell 35 cents to $49.04 a barrel on the New York Mercantile Exchange. Copper fell 2 cents to $2.90 a pound.
CURRENCIES: The dollar slipped to 110.00 yen from 110.06 late Wednesday in Asia.More news: Jammu and Kashmir: Woman killed in Pakistan shelling along LoC
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