The threat, reported by he state-run KCNA news agency, came just hours after U.S. president Donald Trump warned any threat to the USA would be met with "fire and fury". Most of the reaction is to President Trump's warning on late Wednesday and North Korea's comment about exploring the idea of hitting US territory Guam with a missile strike. Still, he said, "the Washington, D.C., bedlam and North Korea's saber-rattling is muddying the broader landscape".
After moving lower early in the session, stocks remain mostly negative in mid-day trading on Wednesday.
Amid the hot rhetoric, USA stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent. The benchmark S&P 500 Index is at 2470.41, down 4.51 or -0.18% and the tech-based NASDAQ Composite is trading 6345.37, down 25.09 or -0.39%.
Eight of the 11 major S&P sectors were lower, with the consumer discretionary index's 0.59 percent fall leading the decliners.
The weakness among oil service stocks comes even though the price of crude oil for September delivery is inching up USD0.01 to USD49.18 a barrel. The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.
At 10:34 a.m. ET (1434 GMT), the Toronto Stock Exchange's S&P/TSX composite index fell 70.95 points, or 0.47 percent, to 15,146.38. However, any signs that the U.S.is preparing for an attack on North Korea and/or the actual launching of missiles by North Korea would likely lead to more significant selling pressure.
Elsewhere, French conglomerate Vivendi saw its stock fall 2.1 percent in the morning hours, while Italy's Mediaset dropped only 0.3 percent. Investors' uncertainty, measured by the VIX volatility index, is still at higher levels not seen since the election, but stock markets are back to positive returns.
European markets opened lower on the news, after falls from United States and Asian markets overnight. Shares of Manulife, which reported better-than-expected results, fell after the company played down talk of a John Hancock spin-off.
The benchmark USA yield on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.
Priceline sank 6.9 per cent as it projected third-quarter earnings below analyst expectations. Brent crude, the global standard, lost 23 cents to 52.14 dollars a barrel in London.
Valeant's stock, which rallied a day before following quarterly results, sank 9.6 percent to C$17.85 after it said its subsidiaries in Australia were the subject of a tax audit.
The Canadian dollar was trading at 78.64 cents USA, down from an average price of 78.71 cents United States on Wednesday. The euro slid to 1.1752 dollars from 1.1793.