Keeping up his tough talk, U.S. President Donald Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face the consequences, and suggested that his earlier threat to unleash "fire and fury" on North Korea was too mild.
Subdued U.S. inflation has stirred doubts about the chances of another Fed interest rate hike this year, weighing on the greenback.
In other corporate results, a number of companies reported forecast-beating numbers.
The Dow Jones Industrial Average rose 44.33 points, or 0.2 percent, to 21,888.34, the S&P 500 gained 6.01 points, or 0.25 percent, to 2,444.22 and the Nasdaq Composite added 32.10 points, or 0.52 percent, to 6,248.97.
Sterling was last trading at $1.3009, up 0.27 percent on the day.
The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors further incentive to take to the sidelines at least in stock markets.
Emerging market stocks lost 1.27 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.4 percent in its third session of declines to a near one-month low, heading for a 2.1 percent drop for the week.
The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4.
"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.
The CBOE Volatility Index, the most widely followed barometer of expected near-term US stock market volatility, rose the most in about 12 weeks.
The Dow lost more than 100 points on Thursday as investors fretted over escalating tensions between the United States and North Korea.
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The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis. Declining issues outnumbered advancers on the NYSE by 2,309 to 518.
The Canadian dollar was trading at an average price of 78.67 cents USA, down 0.04 of a USA cent.
The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing US consumer prices rose less than expected in July.
"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.
But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. Shanghai's main index also tumbled 1.6 percent to 3,208.54 while Australia's S&P/ASX 200 dropped 1.2 percent to 5,693.10.
"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a research note. The yield on the benchmark 10-year Treasury fell as low as 2.197 percent, its lowest level since June 28, before inching back to 2.201 percent.
Spot gold prices were unchanged at $1,286.27 a ounce, after touching a two-month high earlier.
Nevsun Resources Ltd offset some of the material group's gains, plunging 16.4 percent to C$2.75 after the company reported disappointing quarterly results.
The 30-year bond was last up 4/32 in price to yield 2.7871 percent, from 2.794 percent late on Thursday.
Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in US crude inventories.
They were down 0.7 percent at $48.24 per barrel, on track for a weekly loss of 2.7 percent.