Outside the political arena, declines in a pair of technology stocks added to the cautious tone on the day.
And with that, the S&P 500's steak of 58 days without a 1% move in either direction came to an end. US stock index futures also fell, with the S&P 500 indicated to open down 0.4 percent.
Oil prices fell for a third day on doubts over OPEC's ability to limit supply. Bank of New York Mellon fell $1.56, or 2.9 percent, to $52.48, while Citizens Financial Group slid 86 cents, or 2.5 percent, to $34.17.
The Labor Department said on Friday the Consumer Price Index (CPI) edged up 0.1% last month after being unchanged in June.
The Standard & Poor's 500 index fell 24 points, or 1 percent, to 2,449 as of 2:16 p.m. Economists had forecast a 0.2% growth for June. Core prices had also been expected to climb by 0.2 percent.
Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the USA continue to talk of raising interest rates or scaling back stimulus programmes.
Asian equities extended heavy losses Friday as a worldwide sell-off triggered by US President Donald Trump doubling down on his North Korea rhetoric showed no sign of abating.
Late in the afternoon, Trump told reporters that his "fire and fury" warning to North Korea may not have been tough enough.
USA equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough.
Now installed in the White House, Trump issued a new warning to Pyongyang on Friday, tweeting: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely". "Hopefully Kim Jong Un will find another path!"
South Korea will repatriate this week a North Korean man who was rescued last week while adrift in the southern side of the Yellow Sea, the Ministry of Unification said Thursday.
Meanwhile, the Russell 2000 index of small-cap stocks finished out the week 2.7% lower, its biggest one-week decline since February 2016. The index bounced off its lowest closing level in six months. It soared over 2 percent in the previous two sessions, and is set for a weekly gain of 2.25 percent.
Oil also regained momentum as data pointed to declining U.S. inventories. Autodesk (ADSK) and Red Hat (RHT) posted notable gains.
European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.
South Korea's Kospi sank 1.8 percent to 2,316.88 and Hong Kong's Hang Seng shed 1.5 percent to 27,041.83. Japanese markets were closed for a holiday.
The major European also saw further downside on the day.
Looking ahead, Canada new housing price index for June, US weekly jobless claims for the week ended August 5 and US PPI for July are slated for release in the NY session.
"I do think I expect inflation to also start to move higher in the medium term but probably not get all the way back to 2-percent on a year-over-year basis, because, remember, we've had these very weak inflation readings for a number of month", Dudley said.