President Donald Trump said on Tuesday that US threats from Pyongyang would be met with "fire and fury", which prompted North Korea to say it was considering plans for a missile strike on the USA pacific territory of Guam.
Earnings hits and misses also had a strong influence on the Canadian market, with a string of companies swinging in both directions.
Mattis said North Korea must stop isolating itself and "stand down" in its pursuit of nuclear weapons, and Pyongyang "should cease any consideration of actions that would lead to the end of its regime and the destruction of its people".
US stock-index benchmarks opened slightly higher on Friday, but equities were on pace for its ugliest week in months amid intensifying rhetoric between the USA and North Korea.
The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.0 percent to C$93.36, and Manulife Financial Corp falling 2.8 percent to C$24.93.
At 12:28 p.m. ET (1628 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 percent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 percent, at 2,472.12.
Money also flowed into consumer discretionary stocks. Japan's Nikkei 225 Index tumbled by 1.3%, while Hong Kong's Hang Seng Index fell by 0.4%.
Major indexes in Europe closed mostly lower.
Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough.
The back-and-forth came on the heels of reports the United States intelligence community has determined North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles.
The Dow closed down 205 points Thursday, in its biggest decline since May 17, after U.S. President Donald Trump rejected criticism that his threats to release "fire and fury" had been too inflammatory.
Nasdaq 100 e-minis were down 39.75 points, or 0.67 percent, on volume of 53,600 contracts. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, fell 3.3 percent following a 44.4 percent jump the day before. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.5 basis points at 2.228%. Netflix lost 1.5 per cent. The company also said sales at its established stores declined for the fourth straight quarter.
Priceline sank 6.9 per cent as it projected third-quarter earnings below analyst expectations.
Stocks are opening slightly lower on Wall Street after several companies reported disappointing results.
CURRENCY: The dollar declined to 109.79 yen from Tuesday's 110.34 yen. The euro edged down to $1.1727 from $1.1751.
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