Wall Street declined on Thursday, with the S&P 500 registering its first daily drop of more than 1% in almost three months, as investors grew cautious over escalating tensions between the US and North Korea.

The Dow Jones Industrial Average fell 163 points, or 0.74%, to 21,886, the S&P 500 lost 31 points, or 1.23%, to 2,443 and the Nasdaq Composite dropped 117 points, or 1.84%, to 6,236.

Investor sentiment turned negative after North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the US Pacific territory of Guam in an unusually detailed threat.

Traders turned towards safe-haven assets such as gold, helping the precious metal touch a two-month high, and the Japanese Yen rose.

Economic data showed US producer prices unexpectedly fell in July, recording their biggest drop in nearly a year, while separate figures showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

However, Federal Reserve Bank of New York President William Dudley suggested on Thursday that the central bank was on track to raise interest rates once more as he expects sluggish inflation to rise over the next several months.

Tech shares sank by 2.2%, with the financials, consumer-discretionary, energy and industrials sectors all falling at least 1.3%.

Apple Inc., which sank 3.2%, and Goldman Sachs Group Inc., which shares gave up 2.4%, weighed the most on the Dow.

Shares of Macy's tumbled 10.2% and Kohl's was down 6% as the companies continued to report a drop in quarterly same-store sales. Blue Apron shares tumbled nearly 18%, despite a beat on revenue.

Live Nation Entertainment Inc. shares pared gains from strong earnings reported late Wednesday and closed up 5.6% after reports that Amazon.com Inc. announced it was getting into the event-ticketing business. Amazon shares finished down 2.6%.

In Asia, share markets remained pressured on Friday in morning session after US-North Korea geopolitical tensions came to the fore once again.

South Korea's benchmark Kospi index fell 1.69%. In Australia, the S&P/ASX 200 was down 1.13%. Markets in greater China mirrored the slide in global equities. Hong Kong's Hang Seng Index fell 1.22%. On the mainland, the Shanghai Composite declined 0.68% and the Shenzhen Composite shed 0.52%.

Japan markets are closed for the Mountain Day holiday.