US stocks had closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after US President Donald Trump vowed to respond aggressively to any threats from North Korea.

After scaling back from record highs earlier in the session, Wall Street's three major indexes dipped after Trump said North Korea “will be met with fire and fury” like the world has never seen if it threatens the United States.

“Trump's response was aggressive and that's why the market turned lower,” said Ken Polcari, Director of the NYSE floor division at ONeil Securities.

Japan had said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programmes as Pyongyang's continues missile and nuclear tests in defiance of UN sanctions.

Investors, who took the North Korea report from Japan in their stride earlier in the day, lost their appetite for risk after Trump's comments to reporters during his vacation at his golf club in New Jersey.

The Dow Jones Industrial Average ended down 33.08 points, or 0.15 per cent, at 22,085.34, snapping a 9-day streak of closing records. The S&P 500 lost 5.99 points, or 0.24 per cent, to close at 2,474.92 and the Nasdaq Composite dropped 13.31 points, or 0.21 per cent, to 6,370.46.

The CBOE Volatility Index, better known as the VIX and the most widely-followed barometer of expected near-term stock market volatility, closed at 10.96, its highest in about a month.

Ten out of the 11 major S&P 500 sectors ended lower after the comments with the only gains seen in the utilities sector , which is seen as a bond proxy because of its slow but predictable growth and dividends.

Utilities closed up 0.3 per cent, while the materials sector was the S&P's biggest loser with a 0.9-per cent drop.

Trading volume also picked up in the late afternoon of what had been a sleepy summer session while the US Congress is expected to be in recess until September 5.

The S&P hasn't moved more than 0.5 per cent in one day since July and has fallen more than 1 per cent only twice this year.

The financial sector index gave back gains after news California insurance regulator will probe whether Wells Fargo & Co and an insurance company harmed residents by selling insurance they did not need. Wells Fargo still ended up 0.3 per cent at $52.71.

Shares of Michael Kors ended up 21.5 per cent, after the luxury goods maker raised its full-year revenue forecast.

NYSE declining issues outnumbered advancers 1.73-to-1; on Nasdaq, a 1.47-to-1 ratio favoured decliners.

About 6.22 billion shares changed hands on US stock exchanges, slightly above the 6.15 billion average for the last 20 sessions.

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