But the market quickly bounced back, led by numerous tech stocks that were sinking on Thursday. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers".
The yen has also registered its biggest weekly gain since May against the dollar amid speculation that investors of Japan, as the biggest creditor nation, would repatriate their funds should a war break out.
Tokyo's benchmark Nikkei 225 index dropped 1.29 percent, or 257.30 points, to end the day at 19,738.71 while the Topix index of all first-section issues fell 1.07 percent, or 17.42 points, to 1,617.90.
The Japanese yen hit an eight-week high against the USA dollar, while spot gold also reached a two-month high.
The Nasdaq Composite Index plunged 2.1% to 6216.87 and the Standard & Poor's 500 Index dropped 1.45% to 2438.21.
'Stock markets in Europe are still under pressure because of the heightened tensions surrounding North Korea, ' said David Madden, market analyst at CMC Markets UK. According to the data released by the Bureau of Labor Statistics on Tuesday, the U.S. JOLTs Job Openings rose to 6.163 million in June-higher than May's reading of 5.702 million and the market's forecast of 5.775 million.
"The overnight price action provides a good guide for a likely trading pattern in the case of further escalation - being long an equally-weighted basket of yen and franc vs short won should do well under such circumstances", said Chris Turner, head of foreign exchange strategy at ING.
Earlier, the dollar slipped as low as 108.91 yen, its weakest level since June 14, when the greenback fell as low as 108.81 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.
The dollar index fell 0.3 percent, with the euro up 0.36 percent to $1.1812.
ANALYST'S TAKE: The U.S.jobs figure "was through the roof" and the NFIB survey "painted a much better picture for the U.S. economy than most believed", Stephen Innes of OANDA said in a report.
"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", said TD Securities in a research note. That is significant because yields fall when bond prices rise. On Comex, the gold price climbed 0.9% to $1,274.30 an ounce, while silver rose 1.4% to $16.61 and platinum added 0.4% to $976.15. Wall Street was poised for a soft opening with S&P futures and Dow futures both down 0.2 percent. Brent crude, used to price worldwide oils, added 26 cents to $52.96.