Macy's stock price slumped -10.25% and its pain was shared by other retailers who were also down such as Kohl's (-5.80%), Dillards (-15.87%), JC Penny (-8.72%) and Sears (-6.42%).
INFLATION: The Labor Department said consumer prices edged up 0.1 percent in July following no gain in June.
The focus on North Korea largely overshadowed a Labor Department report showing an unexpected drop in USA producer prices in the month of July.
Sterling slipped below $1.30, close to a two-and-a-half-week low but it strengthened against the euro by 0.2%, following Tuesday's 10-month low.
The technology sector was the biggest weight on the S&P 500 index with a 1.9-percent drop.
Earlier this week, Trump said the U.S. would unleash "fire and fury" on North Korea if it continued to threaten the U.S. North Korea has announced a detailed plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, a major military hub and home to U.S. bombers.
The financial index had risen earlier in the session after the Labor Department said US job openings, a measure of labor demand, jumped to a record high in June to the highest level since December 2000.
The losses came on heels of Tuesday's pullback in stocks after Trump threatened North Korea with "fire and fury" over its nuclear ambitions.
STARWOOD PROPERTY TRUST, INC. (NYSE:STWD) Downgraded by BidaskClub
BidaskClub cut shares of Essex Property Trust from a strong-buy rating to a buy rating in a research report on Friday, June 30th. Aperio Group LLC owned about 0.08% of Starwood Property Trust worth $4,389,000 at the end of the most recent reporting period.
The market indexes wavered between small gains and losses for much of the morning, then veered lower by afternoon.
USA stock index futures were lower on Friday as the escalating war of words with North Korea drove investors to seek safety in low-risk assets. Still, all three gauges are within 5 percentage points of record levels. Brent crude, the global standard, lost 23 cents to $52.14 a barrel in London. Natural gas gained 2 cents to $2.82 per 1,000 cubic feet.
Macy's (M.N) shares closed down 10.2 percent and Kohl's (KSS.N) fell nearly 6 percent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off.
In the United Kingdom, the stock of TV giant ITV was down 1.9 percent in early trading, and Sky shares were down 0.5 percent, while Germany's ProSiebenSat.1 fell 1.2 percent.
OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price global oils, declined 20 cents to $51.70 per barrel in London.
About 6.48 billion shares changed hands on USA exchanges on Wednesday compared with the 6.16 billion average for the last 20 sessions. Core prices had been expected to rise by 0.2%.
In the latest economic data, the consumer-price index (http://www.marketwatch.com/story/us-consumer-inflation-remains-soft-in-july-cpi-shows-2017-08-11) rose a seasonally adjusted 0.1% in July, its fifth straight month of softness, raising more questions about whether inflation will eventually rise to hit the Federal Reserve's 2% annual rate target.
In the eurozone, the Paris CAC 40 lost 0.3 percent compared with the closing level on Wednesday. Japan was closed on a public holiday.