"There is a low probability that we will have a war with North Korea", he said, and a larger pullback in stocks is "a buyable drop".
At 12:36 p.m. ET (1636 GMT), the Dow Jones Industrial Average was down 158.98 points, or 0.72 percent, at 21,889.72 and the S&P 500 was down 27.37 points, or 1.11 percent, at 2,446.65.
The Standard & Poor's 500 index fell 35 points, or 1.4 percent, to 2,438, its biggest drop since mid-May.
Why wasn't the market impacted. The Russell 2000 index gave up 24.40 points, or 1.8 percent, to 1,372.54.
North Korea had responded to Trump's previous promise to unleash "fire and fury" with a threat to land a missile near the U.S. Pacific territory of Guam.
The tech-heavy Nasdaq composite bore the brunt of the sell-off, falling 135.46 points, or 2.1 percent, to 6,216.87.
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However, New York Fed President William Dudley said on Thursday he expected inflation to rise and suggested that the central bank was on track to raise rates once more this year.
Emerging market stocks lost 1.28 percent. Shares of J.C. Penney dropped 78 cents, or 17%, to $3.93 Friday after the department store's second-quarter loss exceeded expectations. The country previously threatened a further "all-out war, wiping out all the strongholds of enemies, including the USA mainland" in a government statement. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group, New York.
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.
"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.
There were falls of almost 2% on South Korea's Kospi and Hong Kong's Hang Seng, with markets in mainland China and Australia also down - taking their cues from sharp losses on Wall Street earlier.
Sterling was last trading at $1.3009, up 0.27 percent on the day.
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Bloom said she and Fields had just relocated to the Toledo area from Florence, Kentucky, a Cincinnati, Ohio, suburb. Those left standing scattered, screaming and running for safety in different directions.
Markets in Italy, France and Germany also saw declines.
Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.
"This inflation data for the month was not good".
Bond prices, which move inversely to yields, closed higher.
Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen rose.
The local currency closed at 1,143.50 won against the USA dollar, down 1.50 won from the previous session's close.
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Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories. The stock fell another 2 cents, or 0.4%, to 5.12 Friday.